Tags: Goldman | U.S. | Treasury | Yields | Crash

Goldman Sachs: U.S. Treasury Yields Will Plunge

Tuesday, 02 Mar 2010 03:04 PM

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Goldman Sachs is calling a top for U.S. Treasuries because the firm’s analysts believe inflation and interest-rate hike expectations have been overdone for U.S. government bonds.

“At 3.70 percent, 10-year Treasuries are at the top end of the trading range,” Goldman said in a recent report. “Our Sudoku model suggests that based on consensus expectations for growth, inflation and policy rates, 10-year yields should trade at around 3.50 percent.”

“If we were to plug our below-consensus macro forecasts, Sudoku would put the fair value closer to 3.0 percent.”

In fact, Goldman appears to expect inflation will rapidly fall to very low levels.

“We continue to expect disinflation in core consumer prices,” the firm notes. “We have argued for quite some time that core inflation has been sticky up until January because of two temporary inflationary forces — tobacco and car prices,” two factors that alone were responsible to nearly half of a recent year-on-year reading in core inflation.

Tobacco prices rose more than 30 percent last year, as local governments raised taxes in order to make up for their budget shortfalls, and vehicle prices have risen steeply largely because car dealers are now selling their new car inventory at normal prices.

Treasuries recently rose on speculation demonstrations in Greece will make it tougher for the government to cut the European Union’s biggest budget deficit, increasing demand for the relative safety of U.S. securities, Business Week reports.



© 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

Rise in Unwed Mothers Seen Limiting Children's Futures

Tuesday, 29 Jul 2014 19:25 PM

New Census Bureau statistics show the percentage of women who are married when they have their first child has been drop . . .

Hillary Takes Flak for Comment Seeming to Defend Hamas

Tuesday, 29 Jul 2014 19:12 PM

Former Secretary of State Hillary Clinton is coming under fire after saying that Hamas hides its rockets in civilian are . . .

Ted Cruz Slams House Immigration Bill, Says Fails to Stop Obama Order

Tuesday, 29 Jul 2014 18:46 PM

U.S. border security will probably suffer if Congress fails to act on President Barack Obama's $3.7 billion request to c . . .

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