Societe Generale: US government restart could trigger greater volatility in interest rate markets

Interest rate volatility is likely to rise again as the US government ends its shutdown, with US Treasury rates leading the way and economic data likely to beat expectations in both directions, according to interest rate strategists at Socie ́ te ́ Ge ́ ne ́ rale. "With the economic regime restarting and US interest rates expected to be the most volatile, we maintain our bullish stance on US debt over German debt," the strategists said. They noted that upcoming inflation and employment reports were crucial to shaping market expectations for the Fed's interest rate path, which could break out of recent volatility ranges. Eurozone interest rates will remain on the back burner, strategists believe, as resilience data and the relatively clear ECB policy path will continue to dampen market volatility. (Jin 10)