LIVE MARKETS-BofA raises Treasury yields forecast, still sees 10-year under 5%
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BOFA RAISES TREASURY YIELDS FORECAST, STILL SEES 10-YEAR UNDER 5%
Bank of America has raised its forecasts for where it sees Treasury yields trading in this year on expectations that the Federal Reserve has finished cutting interest rates. But the bank still sees the benchmark 10-year yield as likely to hold below the 5% level.
“We revise our 10yT forecast to 4.75% for end-'25 to reflect improving fundamentals. We will have more conviction to fade 10yT levels > 5%. A supportive policy rollout sustains expectations for higher growth, sticky inflation, and higher uncertainty for longer,” interest rate strategists at the bank said in a report.
BofA said on Friday that it no longer expects the Fed to continue cutting rates and flagged the possibility of a rate hike, after December’s jobs report showed stronger jobs gains than expected.
The benchmark 10-year yield US10YT=RR peaked at 4.809% on Tuesday, before dropping to 4.665% on Wednesday on relief that consumer prices didn’t show signs of re-accelerating in December.
The bank previously expected the 10-year Treasury yield to decline to 4.25%. BofA expects the 2-year yield US2YT=RR to hold around 4.5% this year, compared with its previous forecast for 4%.
The 5-year yield US5YT=RR is now expected to trade at 4.65%, compared to 4.15%, and the 30-year yield US30YT=RR is likely to trade at 5% in the first half of the year, rising to 5.05% in the second half of 2025, compared to previous expectations for a 4.50% and then 4.55% rate.
(Karen Brettell)
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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
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U.S. STOCK FUTURES SURGE, YIELDS SLIDE, AFTER BROADLY IN-LINE CPI - CLICK HERE
BANK OF JAPAN HIKE IN PLAY NEXT WEEK - CLICK HERE
HEALTHCARE STANDS OUT AS US EARNINGS POTENTIAL TO BROADEN - SAXO - CLICK HERE
UK CPI: JUST WHAT THE DOCTOR ORDERED - CLICK HERE
UK STOCKS OUTSHINE IN EUROPE AS INFLATION SLOWS - CLICK HERE
EUROPE BEFORE THE BELL: FTSE FUTURES OUTPERFORM ON SOFT INFLATION DATA - CLICK HERE
INFLATION DUO TAKES CENTRE STAGE - CLICK HERE
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