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

Victor Xing

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Term premium; monetary policy; fixed income; long-maturity bond yields; financial conditions (search for similar items in EconPapers)
JEL-codes: E0 E4 E5 G1 G23 (search for similar items in EconPapers)
Date: 2018-10-14
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:89516

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