Negative real yields on major sovereign debt here to stay – Reuters poll

The latest Reuters poll of over 100 fixed-income strategists showed that an era of negative real yields on major sovereign debt is here to stay, with the expectations for positive returns not on the table are a distant dream.

Key findings  

“More than three-quarters of strategists, or 57 of 75 with a view, said the most likely path for sovereign yields would be to stay around current levels or be range-bound - not very far from this year’s lows and well below their pre-COVID-19 rates.”

“The US 10-year Treasury yield was forecast to rise over 25 basis points to 0.93% in a year, about half the expected average inflation rate, suggesting negative real returns over the coming year.”

“Nearly 80% of strategists, or 35 of 45 with a view, said the Fed’s promise of near-zero interest rates for several years would keep major government bond yields “low. Only about 20% of respondents said it would “not stop them from drifting higher.”

“But over 50% of 37 strategists with a view said emerging economies’ government debt was most at risk of a sell-off over the coming year.”

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