US Treasuries - bullish Page 7

We see the recent correction higher in bond yields as an opportunity to reset bullish positions, favouring 30-year Treasuries in the US. Ultimately what matters to bond yields is the path of short rates, and this is unlikely to be significantly changed by near-term optimism regarding a vaccine. We take similarly bullish stances on duration in Canada and the UK.

Mainland China – mildly bullish Page 25

Persistently low inflation, dearth of yield elsewhere, and better valuations for domestic investors support our stance on China’s government bonds. The supplydemand balance should also be more favourable in the coming months now that local government bond (LGB) supply has been completed.

Mexico – mildly bullish Page 12

It’s so much better than 2016. Following the US Presidential Election Mexico’s bonds are moving more in tandem with their US counterparts. The significant economic contraction still argues for lower rates, although this is more likely to be delivered in 2021. Hence our preference to move up the Mexican curve to longer maturities.