Societe Generale Determines 'Fair Value' for Treasuries

The video discusses a fair value model for US 10-year treasury yields, initially set at 2.85% based on GDP and inflation. Adjustments for global forces like ECB and Japan's QE lower it to 1.95%. Despite market detachment from fundamentals, a paradigm shift is needed for significant yield changes. The US differs from other regions due to higher inflation and no current QE. Risk scenarios include further QE from Europe and Japan, potentially affecting US yields. The call is for yields to decline to 1.25% by Q3 due to Brexit uncertainties, with a possible rise to 1.50% by year-end.

What factors were initially considered in the fair value model for US 10-year treasury yields?

• GDP and inflation

• Consumer confidence index

• Stock market trends

• Unemployment rates

How did the adjusted fair value model account for global economic forces?

• By considering only domestic market trends

• By ignoring inflation rates

• By focusing solely on US economic data

• By including ECB QE and potential QE from Japan

What recent economic data influenced the movement of treasury yields?

• Falling stock market indices

• Decreasing consumer spending

• Rising unemployment rates

• Strong payrolls and retail sales data

What is a potential risk scenario for US treasury yields according to the discussion?

• Decrease in global inflation

• Stability in global markets

• Increase in US interest rates

• Decoupling of European and US yields

What is the predicted trend for US 10-year treasury yields by the end of Q3?

• Decline to 1.25%

• Rise to 2.00%

• Remain stable at 1.50%

• Increase to 3.00%