Halister News

(Bloomberg) -- Selloff will continue to lead UST 10Y yield to a sustained break through 2.50% on hopes of “Trumponomics” boosting economy; UST 30Y yield to test 3.35-3.40% range before ending 2017 closer to 3%, BMO strategists Ian Lyngen and Aaron Kohli write in 2017 outlook.

• Market to refocus on under-employment, impacts of USD strength and potential for technical recession toward end-2017 as “post-fiscal euphoria” subsides
• Risks to forecast include higher inflation from Trump trade war or softer stance on immigration, either would push yields up in short-term but weigh on medium-term growth
  • This would subsequently “put the brakes” on real economy and drive yields lower, but not until 2018
  • Other risks to USTs include higher issuance amid uncertain foreign demand, FOMC policy bias, European elections, aging demographics in U.S., corporate profitability, energy borrowing
• “We’re arguably moving away from a market best characterized as offering long spells of mind-numbing boredom punctuated by monuments of sheer panic.”