FXStreet reports that economists at Capital Economics don’t see a fundamental argument for lower long-term yields, and think that they will resume their rise before long.
“Very rapid economic growth is on the way this year and next. We think the stage is set for a significant pick-up in inflation in the near-term, perhaps even more than is currently discounted in markets. And this may cause investors to factor in a tighter stance of policy further down the line, even if they believe the Fed when it suggests it is in no rush to tighten over the next couple of years. We expect this to help push up long-term real yields over the next couple of years. We forecast it to reach 2.25% and 2.50% by end-2021 and end-2022, respectively, compared with its current level of ~1.6%.”
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