In the US, a mean reversion of around 4% for 10-year yields is the ongoing central tendency. And the 2yr yield is not deviating too much from the 3.5% area, with the market continuing to discount a floor for the funds rate at or about 3%. There has also been a slow ratcheting tighter in the 10yr swap spread in recent weeks, correlating with some better news on the fiscal story (2025 fiscal deficit confirmed as below that of 2024). We stick with the directional sentiment as laid out here at the beginning of September. The idea is that there's a vulnerability for a break below 4% in the near term. But on a multi-month ... (full story)