Institution: Beware of the developed markets' long-term interest rates rising again in tandem

Golden Finance News reports that on May 18, a research report from CITIC Securities said that on May 15, the yield on the 10-year U.S. Treasury broke through 4.5%, and the 30-year U.S. Treasury yield rose above 5.0%, with two key psychological thresholds surpassed. At the same time, long-end interest rates across major developed markets such as the UK, Japan, and Germany moved upward in tandem, and global risk assets generally came under pressure. We believe the recent rise in interest rates is driven by the U.S.’ broadly higher inflation data, the “muscle memory” of the “Warfare shock,” heightened concerns about U.S. Treasury supply amid mounting pressure, political turmoil in the UK, and worries about capital returning triggered by higher Japanese bond yields. As the global asset-pricing anchor, the significant rise in long-end U.S. Treasury yields is likely to bring about a stronger U.S. dollar, setbacks to growth stock valuations, pressure on precious metals and long-duration credit assets, and a liquidity shock to emerging markets. We believe the market had previously continued to overlook oil price and inflation risks, but in an environment where global crude oil inventories are continuously being depleted, the combination of high oil prices, inflation, and high interest rates at elevated levels may persist as a fact. The key focus going forward will be developments in the Strait of Hormuz and policy signals following the appointment of Wash. (Jin10)