Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2016. REUTERS/Brendan McDermid
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The implications for markets appear to be further increases in bond yields, developed world stocks and the dollar, while emerging market currencies, stocks and bonds are expected to struggle under the weight of higher U.S. bond yields.Bond yields to FALL?HSBC, who correctly called the recent slide in U.S. bond yields to historic lows, says bond yields may well rise next year and expects 10-year Treasury yields to hit 2.5 percent."For the first time since 2006, there will be no big easing of monetary policy in the G-7, and interest rates and inflation will surprise to the upside".They even pin a date on when the bond bull run likely ended: July 11, 2016, when the 30-year U.S. bond yield bottomed out at 2.088 percent. The "good carry" in EMFew dispute that a higher dollar and U.S. yields next year will hurt emerging markets. Goldman Sachs has long championed a stronger dollar and higher yields. A 10-percent rise in the dollar and cut in U.S. corporation tax to 20 percent could add 6 percent to global earnings per share.
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