Oversupply is deflationary…US long bond yields have not bottomed…
We keep hearing near panic pronouncements about interest rates soaring should the Fed start tapering. Interestingly, one could make the argument, and one has, the end of taper will lower inflationary expectations, i.e. because of fewer reserves being thrown on the market by the Fed, and thereby interest rates will move lower. I am talking long rates here. Long rates are driven more by inflationary expectations than anything else, over time.
