The projection at the start of 2023 was for an increase of more than 100 basis points. They expect 10-year Treasury yields to rise about 60 basis points over the coming year, near the bottom of the three-month range. Traders in forwards markets are also recalibrating their bets to reflect the confidence in central banks. Global Inflation Alarm Augurs a Long Hot Summer of Rate Hikes “Large pools of pension funds with long-dated liabilities will need to be invested in long-dated bonds no matter what, and tail risks of a recession could also lead to hedging with long-term bonds,” said DBS’ Chang. “We’re not headed to 4.5% or 4.25% even - I think that we will be headed somewhat lower in yield levels.” “A 10-year Treasury is sort of 10 years of patience to average out where the policy rate will be - the bond market is believing that this inflation was an aberration,” Steven Wieting, the New York-based chief investment strategist at Citi Global Wealth Investments, said at a briefing in Singapore. Treasuries have lost almost 2% over the past three months, paring this year’s gain to about 1.6%, according to a Bloomberg index. “This is true if markets see long-term inflation expectations as being anchored at close to 2%, and if they view long-term growth rates to be no higher than what they are today.”Īnalysts in a Bloomberg survey predict that the 10-year US yield will decline to 3.39% by year-end. “We are in an ironic situation where the more hawkish central banks are in hiking rates, the better it is for inflation credibility and long-term yield stability, assuming that there are no fiscal upsets along the way like in the UK last year,” said Chang Wei Liang, a strategist at DBS Bank Ltd. They risk being caught flat-footed if price gains prove to be more stubborn than expected, forcing authorities to keep borrowing costs higher for longer. Undeterred by a record 12% loss in US bonds last year, investors are wagering that central banks will finally be able to get a handle on inflation as growth slows and supply chain disruptions ease. Benchmark 10-year Treasury yields have fallen 10 basis points this year to 3.77% even after the Federal Reserve jacked up interest rates aggressively and vowed to keep hiking. Investors are piling into longer-dated notes on bets that policy makers will succeed in taming inflation, an outcome that will deliver strong and stable returns on debt. The Big Names That Got Backstop for Billions in Uninsured SVB Deposits US Navy Detected Titanic Submersible’s Implosion Days Agoįive-Star Hotel Guest Leaves Without Paying After 603-Night Stay These Are the World’s Most (and Least) Liveable Cities in 2023 Titanic Sub Crew Dead After Vessel’s Catastrophic Implosion Check-in: 3 p.m.(Bloomberg) - Central banks have ramped up their hawkish rhetoric this month but for bond bulls, that’s a good thing. 25: $225 Register three or more attendees to receive a group discountīaker Tilly has reserved a room block at: The Dallas Carrollton Courtyard and Carrollton Conference Center 1201 Raiford Rd, Carrollton, TX 75007 | Phone: 97 Guestroom expenses are NOT included in conference registration. CTĪ full agenda and CPE credit will be released soon. CT Don’t miss our networking roundtables ending at 3 p.m. Who should attend: Finance professionals and leaders in the faith-based community Agenda preview: Join Baker Tilly as we host the eighth annual Faith-Based Finance Collaborative (FBFC) from October 24-25 in Carrollton, Texas! The FBFC is an opportunity for faith-based finance professionals and leaders to come together to network with peers, gain industry insights and learn more about Baker Tilly.
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