The Year Ahead For Bond Markets
2025-01-06 07:43:00 ET
Summary
- We see fair value for the U.S. 10-year yield at around 4.5%, reflecting our view that headline inflation will settle to a new long-term average of 2.25 – 2.50%, with real GDP growing by 2.50 – 2.75%.
- In credit markets, investors face the dilemma of attractive yields paired with near-historically tight spreads.
- We expect the current technical demand for yield to persist in the year ahead, and we do not anticipate a widespread or meaningful deterioration in credit fundamentals.
By Ashok Bhatia, CFA
Why we think 2025 presents a favorable backdrop for fixed income investors, despite the potential for rising volatility....
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