Yields on key government bonds spiked last week, but don't expect a dramatically steeper yield curve anytime soon, according to UBS.
Benchmark 10-year U.S. Treasury yields rose to their highest levels since March last week on the back of a Bloomberg report — since disputed by Beijing — that China was looking at slowing its purchases of U.S. government debt.
Before that, news that the Bank of Japan had slightly reduced its purchases of longer-dated Japanese government bonds and steeper oil prices have also had a role in the climb higher in yields.
However, yields on longer-dated Treasurys might not have much room further to rise.
"We don't think that the back end of the curve is going to go up significantly from here," Mark Haefele, global CIO of UBS Wealth Management, told CNBC on the sidelines of the UBS Wealth Insights conference in Singapore.
"What you've seen is that inflation has picked up a little bit and we know that ... the Federal Reserve would like to hike rates and that's kind of caused this curve to flatten. But we don't see that dramatic rise in inflation or that tremendous pick-up longer term in growth that is going to make for a much steeper yield curve," Haefele added.