The transitory narrative continues to fall apart
UK 2-year gilt yields climb by 15 bps on the day, the most since 2010
The front-end of the curve is repricing things rather quickly now and all of it is pointing to higher rate expectations as the story of rampant inflation in the months ahead is set to become the dominant theme. Team transitory is basically throwing in the towel.
US 2-year yields are also up to their highest since March last year, keeping a push above 0.40%. In terms of central bank pricing, a rate hike for the Fed is fully priced in for September 2022 while a rate hike for the BOE is fully priced in for December (!) this year.
While equities and FX are relatively sanguine for the time being, expect further moves in rates to have more significant reverberations if this keeps up.