Global Rates Trader: In Search of Support

This Global Rates Trader note reviews this week's global rates selloff and the resulting trade opportunities. The abrupt halt to the stable-volatility backdrop that had characterized the move higher in yields signals a less fundamentally-driven selloff; the market likely needs a catalyst to reinvigorate duration appetite, while valuation and positioning measures point to a building asymmetry toward lower yields. In the US, the initial window following the first Fed hike is typically consistent with front-end flattening, and although Fed pricing is stretched versus survey-based expectations, the near-term asymmetry toward hikes is likely a speed limit on front-end rallies;