Goldman Recommends ‘Underweight’ in Long-Duration Sterling Rates
(Bloomberg) -- The 10-year gilt yield will reach 1.5% by year-end and 2.15% in 2018, favoring “underweight positions in long-duration Sterling rates,” Goldman Sachs analyst Alexander Demyanets writes in note.
- Expect “further build-up” of term premium in long end of Sterling rates curve as inflation rises, household consumption weakens and CB balance sheets normalize
- Short-term rates will likely “remain anchored” as BOE has “limited room to ease policy” given expected inflation pickup in near term; bond yields would need to rise amid “macro headwinds”
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