Morgan Stanley: 10-Year Treasury Yield Will Hit 5.5 Percent This Year

Wednesday, 21 Apr 2010 02:33 PM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The 10-year Treasury bond yield will climb to a nine-year high of 5.5 percent by year-end, according to Morgan Stanley.

The budget deficit, which totaled $1.42 trillion last year and may rise even further this year, will cause the move, Morgan Stanley analysts say. The 10-year yield recently hit a nine-month high of 4 percent and recently was at 3.75 percent.

The budget gap forces the Treasury to issue massive amounts of bonds. Estimates for the Treasury’s bond issuance this year total $2.4 trillion.

And that supply will push bond prices lower and yields higher Jim Caron, Morgan Stanley’s head of bond strategy, told The Wall Street Journal.

"We've never seen this much Treasury supply in the history of the bond market."

But Goldman Sachs sees it differently. Its chief U.S. economist Jan Hatzius predicts the 10-year yield will slip back to 3.25 percent this year.

"Ultimately, we don't find supply to be of such great predictive power regarding what happens to interest rates," Hatzius told The Journal.

His thinking it that record government borrowing is merely a substitute for private borrowing, which is sluggish.

The economy is weak enough to keep inflation from surging, which also will keep interest rates from surging, Goldman maintains.

BlackRock, the world’s biggest money manager, sides with Goldman.

“We’re more comfortable owning longer Treasuries,” BlackRock managing director Stuart Spodek told Bloomberg. “There isn’t inflation in the pipeline.” He’s also attracted by the steep yield curve.

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Ted Cruz, Jeff Sessions: Obama Must be Stopped on Amnesty

Friday, 25 Jul 2014 09:08 AM

GOP Sens. Ted Cruz of Texas and Jeff Sessions of Alabama Thursday criticized President Barack Obama's reported plans to  . . .

US Says Russia Firing Artillery at Ukraine Military

Thursday, 24 Jul 2014 18:51 PM

The United States said on Thursday that Russia was firing artillery across its border with Ukraine to target Ukrainian m . . .

Texas National Guard Could Get Powers to Arrest

Friday, 25 Jul 2014 07:59 AM

The Texas National Guard could acquire the power to make arrests after Gov. Rick Perry announced plans to deploy 1,000 t . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved