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

Wednesday, 21 Apr 2010 02:33 PM

By Dan Weil

  Comment  |
   Contact  |
  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.

  Comment  |
   Contact  |
  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:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Obama: US Can Influence New Generation in Cuba

Sunday, 21 Dec 2014 08:09 AM

President Barack Obama said his plan to normalize relations with Cuba gives the U.S. a chance to influence events at an  . . .

Obama Vows "Do Everything I Can" to Close Guantanamo

Sunday, 21 Dec 2014 08:06 AM

President Barack Obama said in a TV interview set for broadcast on Sunday that he will do "everything I can" to close th . . .

Obama: Sony Hack 'Vandalism,' Not an Act of War

Sunday, 21 Dec 2014 07:50 AM

President Barack Obama said in a CNN interview that he did not consider the cyber attack on Sony Corp which has been bl . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

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