News Digest: US benchmark bond yield to trade at 4% or above till 2024
November 25, 2022
News Digest:
A new report from Goldman Sachs predicts that the US benchmark bond yield will trade at 4% or higher through the next 12 months on the back of steps taken by the Fed to avert economic contraction as part of its battle to fight inflationary pressures.
The ten-year Treasury yields are currently trading around 3.75% but have gone beyond the 4% mark for 23 days in 2022, all of which happened post September. Prior to this brief upswing caused by traders ramping up their bets around the Fed hike, the benchmark rates haven’t reached these levels since early 2010
Takeaway:
Goldman Sachs chief rates strategist Praveen Korapaty says the yield forecasts were based on their perspective of recession staying away from the United States and inflation continuing to hover above the Fed’s targets. It doesn’t seem likely that in a non-recession scenario, with inflation above the Fed’s target, they would be easing the rates, says the report.