Barclays says there is space for higher US yields, questions if Fed policy "is even tight"

<p>Barclays on US Treasuries, say that despite the selloff already that have pushed 10- and 30-year yields to their highest levels since 2007 and 2011 "yields are not stretched".</p><p>Higher rates are being driven by:</p><ul><li>data showing a resilient U.S. economy</li><li>Atlanta Fed's GDPNow forecasting model projecting real gross domestic product growth that could come in at 5.8% for Q3</li><li>the minutes last week from the FOMC's most recent meeting revealed the possibility of more interest rate hikes to come</li><li>higher real (inflation-adjusted) yields</li></ul><p>Barclays point out "building stress" in the options market indicating that "investors are getting worried about a large further selloff" </p><p>And question if the Fed is done:</p><ul><li>"An economy growng above trend, potentially even accelerating, despite the tightening of policy, calls into question whether monetary policy is even tight" </li></ul><p>10 year Treasury yields</p>

This article was written by Eamonn Sheridan at www.forexlive.com.