Coming months are likely to see several factors clearly pointing in opposing directions for global long yields. Economists at Danske Bank expect 10-year US Treasury yields to rise to 1.5% by the end of the year, edging further up towards 2% during 2022.
See: US 10-year Treasury yields to inch higher towards 1.63% – SocGen
Tapering and slowdown pointing in opposite directions for yields
“The economic outlook has become muddier, and recent developments in China could potentially send shockwaves through global financial markets and push long yields down in the coming months.”
“The combination of still high ongoing inflation, the continuing pick-up in the US economy and a tapering decision by the US central bank (the Fed) is likely to put upward pressure on long US yields, in particular, in the next three months, leading us to expect US 10Y Treasury yields to hit 1.5% by the end of the year.”
“We expect an initial US rate hike to be on the cards late 2022 or so and the upward pressure on yields to remain in place. Hence, we expect US 10Y yields to hit 2% in 12 months’ time.”
“Higher US yields should tend to push European yields higher, and we are maintaining our 12-month forecast of 0.1% for German 10Y yields.”