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- Reuters survey chart on key sovereign bond yield outlook: https://tmsnrt.rs/3D0NWWj
- Reuters poll on the outlook for the yield of the US Treasury: https://tmsnrt.rs/39PP8yY
BENGALURU, Sept.30 (Reuters) – Global sovereign yields will only have risen slightly around the same time next year, but most bond strategists polled by Reuters seem convinced the only way is to increase and the spread between short and long term maturities is expected to widen. to broaden.
The latest quarterly poll results coincide with an unusually dramatic increase in Treasury yields following what most say is a decisive shift from the pandemic emergency policy of the world’s major central banks and growing concerns about the ‘inflation.
Their reluctance to forecast anything other than modest increases in yields may also reflect the years these same forecasters have spent predicting such a return to normal only to be flattened by relentless demand – led by central banks – for government bonds. ‘State.
But the selloff in U.S. Treasuries this week that pushed yields to levels not seen since mid-June suggests the government bond market is finally at an inflection point as investors realign their outlook with the Fed and other major central banks.
“Growth is above trend, inflation is high enough for now and for the forecast horizon. In this kind of environment, it is natural that interest rates in general in developed markets rise.” , said Arjun Vij, portfolio manager of JP. Morgan Asset Management’s $ 1.15 billion global bond fund.
“The Fed and the markets are pretty close to the date of the first hike. This is the pace of the hikes” where there is room for the markets to close the gap, “Vij said.
The poll results, conducted Sept. 24-29, underscored the optimistic economic outlook, with 26 of 50 analysts, a majority of 52%, saying that a widening of two-year and ten-year US Treasury spreads over the course of of the coming year was the most likely outcome.
While 11 said the spreads would remain roughly stable, the remaining 13 expected the spread to narrow.
In the poll, more than 60 bond strategists predicted that the benchmark yield on the US 10-year note would climb 1.9% in 12 months, about 40 basis points higher than it currently is.
Benchmark yields in Germany, Britain and Japan are expected to increase by around 10 to 20 basis points over the same period.
But there was no clear consensus among analysts on what would drive major short-term sovereign yields.
Of those who answered a separate question, 24 of 49 said incoming economic data would have the most impact, while 23 chose central bank forward guidance and the other two said COVID-19 developments and the wrangling over the US debt ceiling.
“We believe that the Fed’s reduction in asset purchases… will likely have minimal impact on the market at this point,” said Rick Rieder, director of global fixed income investments at BlackRock, referring to expectations of ‘a $ 10 billion reduction in US Treasury purchases. and $ 5 billion in mortgage-backed securities reduction from its current monthly purchases of $ 120 billion.
“This is in part because the Fed has done a decent job of telegraphing when the tapering is likely to start, but more importantly, it is because the asset purchase cuts are likely to be insignificant in the future. the context of the current size of fixed income markets and how overwhelming the demand for income has become. “
Reports and polls by Prerana Bhat and Tushar Goenka; Editing by Ross Finley and Steve Orlofsky
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