The US economy is on track for a soft landing, according to State Street Global Advisors – but “there are undoubtedly a variety of potential risks”.
US 10-year yields are on the rise, driven by rising odds of a Trump win at next week’s elections, louder conversations around tariffs and consideration of the impact of inflation, the firm’s report said. Yields are up nearly 60 basis points since the Fed’s mid-September’s rate cuts.
These results follow a pattern of underestimation in the US economy, State Street Global Advisors commented. The pattern has been observed through the comparison of US 10-year government bond yields and the Citi Economic Surprise Index, which displays how aligned economic data is with forecasts.
According to the index, economic data has generally exceeded expectations over recent years – and it has been on an upward trajectory since August.
State Street Global Advisors’s report continued: “The positive economic surprise is telling a story of resiliency. With the index remaining in positive territory, bond yields are moving along with it, as higher growth tends to support higher rates.”
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