Fixed Income June 2014 - Higher inflation and credit demand growth to raise short-term yields
  • 2014-06-18T00:00:00
  • Fixed Income
The improving economy is boosting demand for loans as evidenced by the acceleration in YTD credit growth to 1.31% by the end of May from 0.62% on 22 April. As a result, banks transferred their capital to the lending channel, reducing demand for bonds in the primary market while the yield curve flattened. The potential spike in inflation in June (est 5.5% YoY) also made investors demand a premium on current short-term yields.