Global markets are under pressure on the back of economic growth worries due to rising COVID-19 cases and Delta variant concerns. Rob Subbaraman, Head-Global Macro Research, Nomura, on July 9, discussed with CNBC-TV18 the financial services firm’s outlook.

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“US 10-year yield selling off is a combination of reasons. I think, partly it is technical, there has been a big unwinding of positioning. There are also more fundamental reasons – one is the view that the inflation rise we have seen could be temporary and the month-on-month data and some of the more timely data is showing tentative signs of peaking out,” he said.

He cited growth as another potential reason. “Concerns about growth peaking and uncertainty about how much it will slow down – so the arguments here are short-term around the delta variant that is rapidly spreading now in many countries including the US and concerns that could affect activity,” Subbaraman said.

The Nomura official added that another reason for the sell-off is related to policy. If the Fed was to taper early, all those factors combined have led to the decline in long-term interest rates in the US, he said.

“The view we have at Nomura is that the long-term interest rates, 10-year treasury yield, will probably be higher at the end of the year than where we are right now,” he stated.

He believes inflation is not going to come down quickly and especially in the US, it is going to remain sticky and above 3 percent.

“Also, we don’t think that the US economy is going to slow down abruptly. The view in the second half of the year is the US GDP growth is going to be around 5-6 percent and that is still extremely strong growth,” he said.

For the full interview, watch the accompanying video.

(Edited by : Kanishka Sarkar)