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Bloomberg TV HSBC's Steven Major is out with a bold new forecast. In a client note on Thursday titled "Yanking down the yields," the interest-rates strategist projected that bond yields would be much lower than the markets expected because central banks including the Federal Reserve were reluctant to raise interest rates. Major sees the benchmark US year yield, now at 2. He also lowered projections for European bond yields. According to Bloomberg, the median strategist's forecast is for the year yield to rally to 2.
Of 65 published forecasts, Major's 1. Much of the shift lower in our yield forecasts derives from the view that the ECB [European Central Bank] will continue to buy bonds in its QE [Quantitative Easing] program.
The forecast for a 'bowing-in' of curves reflects our opinion that a long period of unconventional policy will create an unconventional outcome. Central banks did not forecast the persistently weak growth or recent decline in inflation.
So data dependency does not easily justify lifting rates from the zero-bound — it might suggest the opposite. In September, the Federal Reserve passed on what would have been its first interest-rate hike in nine years, as concerns about the labor market and global weakness weighed on voting members' minds.
Also last forex vps comparison, European Central Bank president Mario Draghi said the ECB would expand its stimulus program if needed.
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For years, pros across Wall Street have argued that interest rates have nowhere to go but up. Major was one of the few forecasters to correctly predict that in bond yields would fall and end the year lower. Others had predicted that 777 binary options signals affiliate would tradestar stock price as the Fed wound down its massive bond-buying program known as quantitative easing.
SIFMA Issues / Recommendations for Full and Early Holiday Closes for Trading of US Dollar-Denominated Fixed-Income Securities in the US and UK | | Newsroom
Louis Fed, Business Insider "The conventional view has been that a normalization of monetary policy would be led by the Federal Reserve, involve a rise in short rates and a flatter curve," Major wrote. Once again, Major is going against the grain to say yields will fall even further, though the Fed has maintained that it could raise short-term bond market holidays 2016 rates this year. Also, DoubleLine Capital's Jeff Gundlach forecast in June that bond yields would end near where they started the year.
Gundlach also noted in his presentation that yields had risen in previous periods in which the Fed raised rates. Typically, higher interest rates make existing bonds less attractive to buyers, since they can get new notes at loftier yields. And as demand for these bonds falls, their prices also fall, and yields rise.
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For security reasons you should upgrade your browser. Please go to Windows Updates and install the latest version. Trending Tech Finance Politics Strategy Lifestyle Sports Video All. You have successfully emailed the post. Wall Street guru who has been nailing the interest-rate story just made a jarring prediction for The year yield was at 2.
On Thursday, it was near 2. This chart shows Major's forecasts versus the consensus: Treasuries Bond Yields Steven Major.
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