Yen, Euro Will Weaken, But Don't Expect U.S. Rate Surge
Expect a weaker Yen and Euro in coming month, but don't expect U.S. interest rates to take off, even if the Fed hikes rates.
The yield on the 10-year Treasury bond may be creeping higher, but it will be tough for it to move too far above 2% even if the Fed hikes rates in December, said Ed Al-Hussainy, a global rates and currency strategist at Columbia Threadneedle. Al-Hussainy said a weaker pound is the key adjustment mechanism for the U.K. as it leaves the European Union. This will help the UK economy on the margins, but overall Brexit will weigh on it over the next five years. He added that the yen should weaken because the Bank of Japan can do more to stimulate the economy. Similarly, the euro should move marginally weaker as the ECB increases its quantitative easing program in coming weeks.
