Deutsche Bank strategists including Francis Yared say the strategic case for higher rates rests on fiscal policy potentially taking some burden off monetary policy in the medium term.
RBS analysts including Giles Gale agree that fiscal chat, which has power to affect the current bullish, flattening outlook for bonds, is starting to rise. RBS recommends moving into 50-year Spanish debt versus 30-year U.S. Treasuries to hedge these increasing risks.
Barclays says there could be looser U.S. fiscal policy after the elections and deficits could widen as a result, which could lead to spread tightening at the long end.
Meanwhile, we may see some reversal of the steepening in the Japanese government bond curve.