Morgan Stanley predicts 10-year Treasury bond yields will jump more than 40 percent next year, while 30-year fixed mortgages may surge more than 50 percent.
The exploding budget deficit will do the damage, David Greenlaw, Morgan Stanley’s chief fixed income economist, told Bloomberg.
“When you take these kinds of aggressive policy actions to prevent a depression, you have to clean up after yourself,” he said.
“Market signals will ultimately spur some policy action, but I’m not naive enough to think it will be a very pleasant environment.”
The firm predicts the 10-year Treasury yield will reach 5.5 percent next year from about 3.85 percent now. (more)
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