What Higher Bond Yields Mean for Markets, the Dollar

The transcript discusses the implications of nominal bond yields surpassing economic growth, which would be a significant change. It explores the impact on the US dollar, particularly against the Japanese yen, and the role of hedging by Japanese investors. The conversation also covers the potential feedback loop involving emerging markets and oil prices. The discussion shifts to Treasury yields, the Fed funds rate, and global investment trends, highlighting the pressure to keep yields lower than expected. The analysis concludes with insights into speculators' positions on Treasurys and the normalization of yields post-financial crisis.

What would be considered a game changer in the context of nominal bond yields?

• Nominal bond yields decreasing rapidly

• Nominal bond yields remaining constant

• Nominal bond yields exceeding nominal economic growth

• Nominal bond yields falling below nominal economic growth

How is the Dollar Yen typically correlated with equities?

• Inversely correlated

• Negatively correlated

• Not correlated

• Positively correlated

What is the expected Fed funds rate over the next 12 months?

• 4.0%

• 3.0%

• 3.4%

• 2.5%

What is the current positioning of speculators in the Treasury market?

• Highly leveraged

• Neutral

• Net short

• Net long

Why might global investors find US yields attractive?

• Due to high inflation rates

• Because of low yields in Japan and Euroland

• Due to currency fluctuations

• Because of political stability