Thursday, June 27, 2019

1.5 seems to be a lower bound

Goldman Sachs Group Inc. joined JPMorgan Chase & Co. in pulling down its forecasts for U.S. Treasury yields, incorporating expectations for a prolonged hit from the U.S.-China trade war, along with the dovish shift by key central banks.
Goldman’s strategists slashed their year-end 10-year U.S. yield call to 1.75% -- matching JPMorgan’s updated prediction from May 31. That’s down from Goldman’s 2.80% projection reiterated last Sunday. Goldman also cut its yield forecasts for Japan, the euro region and other developed nations.
If we judge by the last recession cycle, it seems the ten year hits a bound at 1.5.  One would expect that bound to be reached this recession.  So a call of 1.75 is simply a recognition that the Fed called the next recession, in advance.

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