RATES: BofAML Lowers End-2016 10Y Yield Forecasts
Source: BFW (Bloomberg First Word)
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UUID: 7947283
(Bloomberg) -- UST 10Y yield forecast lowered from 2.65% “on the back of our economists’ change to 2 from 3 Fed hikes this year,” addition of “a significant risk epidsode of U.S. QE and our equity strategists’ revised forecasts,” BofAML strategists led by Shyam Rajan say in note.
Alert: HALISTER1- BofAML also cut end-2016 forecasts for German 10Y yield to 40bp from 75bp, for U.K. 10Y yield 1.85% from 2.40%
- While they expect “a near-term pullback” to 1.85% for UST 10Y yield, “in the bigger picture much damage has been done”
- Market now expects 4 hikes by 2020, and forward curve flatness and forward inflation expectations “send a far more pessimistic message this time” than in April 2013, when 10Y last reached these low levels
- “Many things need now need to go right” for market to come close to pricing in hikes “as envisioned by the consensus and the Fed”
- Related story: Latest End-2016 UST 10Y Yield Forecasts 1.75%-2.75%
Source: BFW (Bloomberg First Word)
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UUID: 7947283