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A Roundabout Path in the “Snapback” of Long-term Bond Yields

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  • Xing, Victor

Abstract

BIS’s Shin noted that a “snapback” in long-term interest rates represents the biggest risk in the global economy, as a decade of policy-induced yield-chasing not only directly lowered long-term rates but also begot further demand. With term premium decompress amid waning policy support, higher long-term bond yields will induce further duration shedding to threaten risk sentiment. Nevertheless, the "snapback" in yields will likely take a roundabout path as flight-to-quality flows from deleveraging exert transient downward pressure in bond yields.

Suggested Citation

  • Xing, Victor, 2018. "A Roundabout Path in the “Snapback” of Long-term Bond Yields," MPRA Paper 89516, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:89516
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    More about this item

    Keywords

    Term premium; monetary policy; fixed income; long-maturity bond yields; financial conditions;

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G1 - Financial Economics - - General Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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