U,S, Treasuries Not To Blame For Global Volatility

"I think what's going on here is that the rise in Treasury yields is being blamed perhaps on some of the weaknesses that we're seeing in other markets, stocks perhaps to some extent, emerging markets as well. But I certainly feel that maybe the Treasury market is not quite to blame for as much as it's being blamed for. This being said, obviously the rise in yields is, to some extent, uncomfortable for the market and probably will stay uncomfortable. But I do actually happen to feel that even if Treasury yields were to stabilize here and perhaps go back down a little bit, we would still see quite a sort of difficult environment in many external markets, perhaps particularly in EM. (QUESTION: Well EM, obviously South Africa, Turkey getting hit hard again today. Developed markets, European stocks are down anywhere up to 2% on the major markets and there's a sense that this rise in Treasury yields is behind that. You don't buy that though?)

I think the difficulty for a lot of markets, emerging markets perhaps and stock markets today is that perhaps normally, those markets would anticipate Treasury yields would come back down as a sort of safe haven play with investors moving back into Treasuries. The difficulty, of course, in the current environment is that obviously the market is thinking in terms of the Fed tapering its bond purchases perhaps later in the year and that is maybe stopping Treasury yields from going down in the sort of way that we might anticipate when other financial markets were nervous, and I think that's kind of compounded, if you like, the difficulties in emerging markets and in stocks. But as I said before, I do think that if you look particularly perhaps at the emerging market strains that we're seeing, there's probably good reasons for a lot of those tensions, you mentioned South Africa or Turkey and China perhaps as well with its economy slowing. So I think even if Treasury yields were to stabilize as I said before, some of those markets would still remain under some degree of strain."