HALISTER1: U.S. 30-Yr Yield May Fall Toward Zero in 2 Yrs: Nomura’s Uomoto

U.S. 30-Yr Yield May Fall Toward Zero in 2 Yrs: Nomura’s Uomoto

(Bloomberg) -- U.S. Treasury 30-year bond yield may fall toward zero in about two years as negative JGB yields are pushing Japanese money into major economies’ govt bonds, according to Nomura.
  • Even if BOJ slightly reduces JGB purchases, its effect would be limited to marginal steepening in Japan’s sovereign yield curve, Toshihiro Uomoto, credit strategist at Nomura, writes in note dated Aug. 1
    • Such a move from BOJ is unlikely to undermine downward pressure from negative rate policy
    • Reduction in JGB buying could be a realistic option as negative rate policy may be seen as having sufficiently lowered yield curve
  • NOTE: BOJ will conduct “comprehensive assessment” of QQE policy effects at next meeting on Sept. 20-21, the central bank said on July 29
  • If Uomoto’s forecast proves correct, current Treasury 30-yr bond may return 66% in two years, according to Bloomberg data; the security yields 2.26% today
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Toshihiro Uomoto (Nomura Holdings Inc)

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