In fact, the contrary is true, said Mr Poppenbeek.
“When the average long-term bond yield of the 10 main developed regions has moved up by more than 75 basis points, equity markets have generally rallied,” he said.
Mr Poppenbeek pointed out that the long-term bond yields of the US are “heading higher”, particularly given that the economy is “regaining momentum”.
“Since the depths of the GFC in early 2009, the US unemployment rate has improved from 10 per cent to near 6 per cent today,” he said.
“Over the same timeframe the US manufacturing PMI has expanded nearly 70 per cent.”
“The open market operations (OMO) of the Federal Reserve has clearly helped keep a lid on interest rates; $3.5 trillion of long-term US securities have effectively been removed from circulation,” Mr Poppenbeek said.
“Now that the program is near completion, market participants will ultimately determine the near-term trajectory of US Interest rates,” he said.
Mr Poppenbeek also said “very mixed” economic conditions within Europe are offsetting the improving US economy.
“The unemployment rate for the Eurozone has [increased] from 8.6 per cent in 2009 to 11.5 per cent,” he said.
“As a result, much like the [US Federal Reserve], the European Central Bank (ECB) has conducted open market operations.
“The most recent program will accumulate a broad portfolio of asset-backed securities so as to support the provision of credit to the broad economy,” Mr Poppenbeek said.
“However, the ECB has not implemented any on-market purchases in the secondary sovereign bond market. Accordingly, solvency fears could still drive long-term European bond yields sharply higher."
