Wells Fargo gives bearish bond outlook, cites supply chain bottlenecks and inflation as key risks

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Wells Fargo gives bearish bond outlook, cites supply chain bottlenecks and inflation as key risks (via StephLandsman)

Inflation, whipped up by the supply chain crisis, will push bond yields higher over the next several weeks, according to Wells Fargo Securities' Michael Schumacher.could reach 1.9% before year-end — a 23% jump from Wednesday's close.Schumacher also sees anticipation surrounding how the Federal Reserve will react as an upward driver for yields.. He notes a few central banks, including Norway and New Zealand, have already adjusted their policy rates.

That's when Schumacher he expects investor jitters over the debt ceiling and government funding will make a comeback and drive yields lower."This all goes back to inflation," he said. "It's going to be here for a while, and this is really coloring our market outlook."The Labor Department reported on Wednesday

"[This is] not just the U.S. issue. It really relates to the entire industrialized world at this point," Schumacher noted.which refers to pressures that push prices higher during periods of slowing growth."It's overplayed, frankly," he said. "People say, 'Well, gee, growth is going to be slower next year that this year.' Well, okay, that's true.

 

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