LONDON Jan 5 Goldman Sachs on Thursday raised
its end-year forecast for the 10-year U.S. Treasury yield to 3.0
percent from 2.75 percent, as investors price in further U.S
interest rate increases and an expected fiscal boost from the
incoming Trump administration.
"Over the balance of the year, we expect the trend of higher
10-year government bond yields to extend," the U.S. investment
bank's rates strategists wrote in a note to clients on Thursday.
If the U.S. and global economy performs as well as they
expect, the yield will rise to around 3.25 percent at the start
of 2018 before stabilizing around 3.50-3.75 percent in 2019-20.
The 10-year U.S. yield, considered the global benchmark
long-term interest rate, was trading at 2.42 percent
on Thursday. According to Goldman's analysts, that's closer to
their estimates of 'fair value' than at any time since 2013 but
still on the low side.
The yield fell to a multi-decade low of 1.3210 percent in
July last year but has been rising since, driven by a global
bond market selloff as investors bet that U.S. and global
inflation is coming back to life.
(Reporting by Jamie McGeever; editing by Patrick Graham;