When good news is bad news: Why volatility is here to stay

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Nicolas Trindade, manager of the AXA Sterling Credit Short Duration Bond fund, explains why the credit market will be subject to renewed volatility for the rest of the year as QE tapering looms.

US treasury yields spiked again last month in anticipation of the Federal Reserve announcing the start of a slowdown in its quantitative easing programme at its next policy meeting on 17-18 September. The spike followed months of volatility which have marked the start of a new phase for the credit markets. Since 2 May, the 10-year UK government bond yield has risen by over 100 basis points. This sharp sell-off in gilts has been predominantly driven by fears that the Fed was to taper its current asset purchase programme earlier than expected. It seems the markets are realising, painf...

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