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Bloomberg came out with an analytical piece on early Tuesday in Asia describing further upside for the Treasury yields.

The US 10-year Treasury yields poke February 2020 peak, currently around 1.6%, while the global optimism over the American GDP growth strengthens amid hopes of US President Joe Biden’s $1.9 trillion fiscal package.

“The average projection for nominal gross domestic product hit a 32-year high of 7.6% in Bloomberg surveys,” said the article. As a result, the GDP-yield gap is the largest since Lyndon Johnson was president, per the piece.

“I am bearish on the bond market,” said Julian Brigden, president of the hedge-fund consultant Macro Intelligence 2 Partners.

On the other hand, the report also cites DoubleLine Capital LP’s founder Jeffrey Gundlach while mentioning, “Treasury yields should be comparable to the average of nominal U.S. GDP and German bund yields, a proxy for the level of interest rates in the international markets. By that measure, the comparable bond yields would be above 3%, should the consensus forecasts pan out.”

Also in the article was Goldman Sachs’ yield and growth forecasts suggesting year-end projection for 10-year Treasury yields last week to 1.90% from 1.50%.

FX implications

Given the US dollar’s latest rally taking clues from Treasury yields, further dominance of bond bears can propel the greenback towards the fresh multi-month top, which in turn challenge commodities and Antipodeans.