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00:00 Speaker A
For investors, you talk about risks that you see on your radar. And you emphasize here uh falling dollar, steepening yield curve. You talk about the big move in uh Japan’s bond market. Rank those for us, Kathy. Like if I pressed you, would you say one of those concerns you more than the other?
00:17 Kathy
Oh, I’d say the steeper yield curve is probably the risk that I see because of all the things, you know, I’ve been talking about that the risk to the economy seems to be the upside which would tend to push up
00:27 Kathy
inflation. and um, that is probably a bigger risk to um investors at this juncture than the other factors. So, you know, the Japanese bond market, it’s sort of been running in the background there. It’s an issue to keep track of because Japan’s bond yields have been sort of an anchor in the global economy. So as they lift, it helps pull up yields around the globe because Japanese investors are huge investors offshore.
00:54 Kathy
So that would naturally have some impact on the rest of the world, but I don’t see that as a a huge dynamic for the the dollar or for uh bond yields at this stage of the game. It’s more of a gradual thing that’s happening over time. So it’s more that we get this shift in expectations about what the Fed may do combined with some higher due to some higher inflation or stronger growth that will steepen the yield curve and pull those long-term yields up while the short-term stay relatively flat.