2023-12-12 18:00:04
U.S. Treasury bond prices have rebounded strongly since November this year, and some strategists who have accurately predicted the trend of U.S. bonds this year said the rebound may not extend into next year.
Bloomberg reported on Tuesday (12th) that Praveen Korapaty, chief interest rate strategist from Goldman Sachs Group, and Joseph Brusuelas, chief economist at tax consulting firm RSM, both predict that by the end of next year, the United States, known as the “anchor of global asset pricing,” will 10-Year Treasury Bond Yieldwill rise back to around 4.5%.
Scott Anderson, a strategist from BMO Capital Markets, believes that by the end of next year,10-year U.S. Treasury yieldNot much has changed from the current level, which is hovering around 4.2%.
A previous survey by Bloomberg showed that among the 40 economists and strategists interviewed, only the above three predicted correctly. 10-year U.S. Treasury yieldIt rose to more than 4% at the end of this year, close to the current yield level.
All three analysts now say Treasury traders are falling into the same trap as they have over the past two years: underestimating the strength of the U.S. economy and the likelihood that inflationary pressures may persist.
Signs of slowing on both fronts helped push the U.S. Treasury market to its biggest price rise since the mid-1980s last month. At the same time, the logic behind the sharp decline in yields is that the market speculates that the Federal Reserve (Fed) will lower the benchmark interest rate starting in the first half of next year, with a cumulative reduction of more than one percentage point throughout the year.
Korapaty, chief interest rate strategist at Goldman Sachs, said: “The market has overreacted to expectations of Fed policy easing.” The three said that the market has prematurely ignored the possibility that the Fed will maintain high interest rates for a long time before inflation is safely controlled.
Anderson from BMO said that pre-COVID-19 low interest rates are unlikely to return soon because economic changes have raised so-called “neutral interest rates”, which are interest rates that do not affect the speed of economic growth. That means policymakers need to keep interest rates higher than before to avoid stimulating the economy.
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