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Last Updated : Jan 31, 2018 09:15 AM IST | Source: CNBC-TV18

Don't expect US bond yields to go much higher: UBS

The global rally seems to be on pause mode. In an interview with CNBC-TV18, Geoffrey Dennis, Head-Global Emerging Market Strategy at UBS and James Glassman, Senior Economist at JPMorgan shared their views and readings on the same.

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The global rally seems to be on pause mode. In an interview with CNBC-TV18, Geoffrey Dennis, Head-Global Emerging Market Strategy at UBS and James Glassman, Senior Economist at JPMorgan shared their views and readings on the same.

Will be concerned if US 10-year treasury yield rises above 2.70 percent, Dennis said.

According to him, the markets were overbought and they needed to have some sort of a pullback.

We don’t expect bond yields to go materially higher than they are now, he added.

Emerging markets have had a fantastic start to the year. It does represent a medium-term buying opportunity, he said.

Speaking of Indian Union Budget, he mentioned that our fiscal deficit target for FY19 is 3.2 percent and will watch how government achieves it. The bottomline here is the market does not want to see significant fiscal easing because of electoral purposes and we think there will be a lower Budget deficit target.

While sharing his views on the rise in yields and the fall in the dollar, James Glassman said that this is a healthy response to an improving global economy. This is more of a story about economic trend building a momentum in Europe and elsewhere.

The Federal Reserve is forecasting three hikes this year. If the economy turns out to be much stronger than they anticipated and inflation starts to move up, maybe there would be more hikes but I think they will respond appropriately, in proportion to what is going on, he added.

According to Glassman, an unexpected surge in inflation would be a problem for everybody.

For entire discussion, watch accompanying video...
First Published on Jan 31, 2018 09:06 am

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