While economists surveyed by Bloomberg predict prices will fall, sending benchmark 10-year yields up more than half a percentage point, they’re also scaling back forecasts for the size of the decline. Ten-year yields will be 2.62 percent by Dec. 31, based on the latest responses, down from about 3.60 percent that the surveys projected six months ago.
Inflation is in check, and Federal Reserve Chair Janet Yellen used an appearance in Congress this week to indicate the central bank isn’t in a hurry to raise interest rates. Some people even say bonds can rally.
“We’re quite bullish on U.S. Treasuries,” said Hideo Shimomura, the chief fund investor in Tokyo at Mitsubishi UFJ Asset Management, which has about $67.3 billion in assets. “I don’t think the Fed will move this year. The momentum of the U.S. economy is fading. The inflation numbers are going south.”