Barclays delivers the most banal prediction of 2015

Are the bond bears dead?

I’m just reading through Barclays’ investment themes for 2015 and #1 is “2015 is unlikely to see a repeat of the outperformance of fixed income witnessed in 2014; investors should maintain a balanced portfolio”

At this time last year, every investment bank was scrambling to pick a higher year-end target for 10 year yields. It blew up in their faces and 10-year yields tumbled to 1.88% in October.

Here we are heading toward 2015 with 10s at 2.32% and the US economy inarguably stronger than last year and the Fed undoubtedly closer to hiking and the best they have is “2015 is unlikely to see a repeat of the outperformance of fixed income”!

That’s the most banal prediction in years. It’s hardly even possible. Italian 10s started the year at 4.12%, they’re at 2.13% so unless they finish 2015 year at 0.14%, their prediction is safe.

German yields have fallen 120 basis to 0.77% — they would have to go negative.

Never even mind Treasuries, JGBs or that junk would need to fall to unbelievable yields.

It’s only one bank report but if we get to year-end and there aren’t any banks out there nattering to sell bonds for 2015 then the bond bears are dead and it’s time to sell.