Why Long-end Bonds aren’t Seeing Higher Yields

Hand-wringing over expectations long-end bond yields would rise as the U.S. Federal Reserve tapered its asset purchases appears to have come to naught, with yields actually lower and some analysts now expect they won’t be budging anytime soon.

“There’s a great narrative about bond markets turning a corner,” Burkhard Varnolt, chief investment officer at Julius Baer, told CNBC Tuesday. “It’s utterly wrong.”

Demographics are going to keep pushing long-end bond yields lower, he said. “The entire western world is facing an aging population, which is forcing all their pension funds and insurance companies to be structurally long long-dated government securities,” he said, adding this trend started back in the 1980s and has been pushing yields down ever since.


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