Bond Selloff Is Mostly a Fed Story, Says BofA's Cabana

• The long-end bond selloff is predominantly a US phenomenon, with US long-end rates increasing the most globally since late June.
• The rise in yields is 'almost all real' rates, not inflation break-evens, and is not driven by improved growth expectations or increased supply.
• The key driver is 'elevated interest rate uncertainty', reflected in the steepening of the implied volatility surface, particularly after the July FOMC.
• The market is still searching for a 'credible plan' from the Fed on how inflation will return to target, contributing to this uncertainty.

Mark Cabana of BofA Global Research argues that the US bond selloff is primarily a 'Fed story', driven by 'elevated interest rate uncertainty' rather than growth expectations or supply. He highlights the market's lack of a 'credible plan' from the Fed on how inflation will return to target, especially following the July FOMC press conference.