Alberto Matellán, chief economist at MAPFRE Asset Management, says markets knew of the onset of QT and priced this in, but they only became aware of the revised inflation expectations around the end of August when the Federal Reserve dampened expectations around rate cuts.
Reversion to mean?
An element of normality may now be returning to bond markets, as the prices of long-dated government bonds have moved sharply upwards since the Hamas incursion into Israel and subsequent military actions, as investors seek a safe haven, though they remain higher than at the start of the third quarter.
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David Thorpe is investment editor at FTAdviser
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