Bank Of America: US Rates Sell Off as Reflation and Fiscal Concerns Build - FJElite

US rates are selling off as markets lean further into a reflation narrative. Long-end yields have pushed to their highest levels since the global financial crisis, driven by a mix of factors rather than one clear trigger. Hot US inflation data, continued uncertainty around a deal with Iran, and still-resilient consumer and labour market data are all keeping inflation concerns alive and making it harder for markets to price meaningful Fed easing.

But the move looks broader than just inflation. If this were only an inflation-driven selloff, the curve would likely be flatter or breakevens would be doing more of the work. Instead, the curve is steepening and the move is being led by real rates. That points to deeper fiscal concerns also weighing on the long end, with worries around unsustainable deficits adding to the reflation story and turning what might have been a shorter-term inflation problem into a more persistent long-end bond selloff.