5 Jun 2015
Nonfarm Payrolls implications on yield spreads - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank noted that a robust set of labour data out of the US which, notably, included a modest quickening of average earnings growth to 2.3% y/y from 2.2% (this representing a high since August 2013) has come in as a surprise.
Key Quotes:
"However, we continue to stick to this structural view of QE and, hence, expect yields to remain at historically low levels for a considerable time to come. If US wage growth continues to accelerate, however, then this would sound the death knell for this grand thesis and point to a sustainable recovery taking hold."
"This, in turn, would both embolden the Fed as regards policy normalisation and likely leave the market confident such normalisation is warranted."
"This is not our base case but were such a scenario to transpire then our forecast gradual rise in long-end European yields would err significantly on the side of being overly cautious. To be more specific, if US wage growth breaks up through 2.5% y/y, the case for core European steepeners will become notably stronger."
Key Quotes:
"However, we continue to stick to this structural view of QE and, hence, expect yields to remain at historically low levels for a considerable time to come. If US wage growth continues to accelerate, however, then this would sound the death knell for this grand thesis and point to a sustainable recovery taking hold."
"This, in turn, would both embolden the Fed as regards policy normalisation and likely leave the market confident such normalisation is warranted."
"This is not our base case but were such a scenario to transpire then our forecast gradual rise in long-end European yields would err significantly on the side of being overly cautious. To be more specific, if US wage growth breaks up through 2.5% y/y, the case for core European steepeners will become notably stronger."