Danske note that:
- Global fixed income markets have surged over the past six weeks
And expect higher is still ahead:
We expect long yields to continue rising over the next three months as
- high inflation numbers keep ticking in
- central banks tighten monetary policies further
- and concern about a growing government bond supply increases, with governments scrambling to shield consumers from the effects of high inflation
Projections include:
- 10Y German yields to hit 2.35%
- their US counterparties to reach 4.05% on a 3-month horizon
- Risks to our forecast are skewed to the upside, as we may underestimate the upward pressure on, not least, eurozone yields
Further ahead:
- In 2023, we expect downward pressure on yields from a more or less unavoidable recession in both the eurozone and US economies
