Analysts at TD Securities expect monetary policy divergence to fade in 2019 as the Fed and BoC continue to hike toward their respective neutral rates and the ECB/BoJ/BoE/RBNZ also follow a less accommodative policy path.
Key Quotes
“With the ECB ending QE, BoJ lowering its buying amounts and Fed portfolio runoff hitting full stride, global net government bond supply should continue to rise, putting some upward pressure on term premium.”
“We expect demand for government bonds to emerge from risk asset underperformance. We like steepeners in the EU, Canada, Australia, and NZ. In the US, ongoing Fed hikes should dampen some of the steepening pressures.”
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