(New York)

US Treasuries took a nose dive last week on fears over Italy. They fell from well over 3.1% to well under 2.9% very quickly. However, don’t get used to those levels. The reason why is that the underlying economy is fundamentally solid, with wages and jobs strong, growth solid, and corporate tax cuts likely to give a boost. The Fed also seems likely to continue hiking, even if only slowly.

FINSUM: All these reasons aside, our own view is that yields were on a solidly rising path until the Italy issue. Since we seen that as only a temporary problem (for global markets), we suspect bond investors will regain their views.