Westpac Evans sees Aussie 10-year yield at 1.9% end-2021

By Sophia Rodrigues

Published On 19 Feb 2021 , 04:28 PM

Westpac's chief economist Bill Evans has raised his forecast for US 10-year bond yield to 1.8% from 1.5% by the end of 2021, which has also resulted in an increase in forecast for AUD 10-year yield to 1.9% from 1.55%.

For end-2022, Evans forecasts Australian 10-year yield at 2.5% and 2.5% by end-2024.

Evans' forecasts for the bond rates by end-2021 envisage a further increase of 0.5% in US 10-year rates and Australian 10-year rates.

"That adjustment, given our expectation that inflationary expectations have largely peaked, will still have real yields in negative territory," he wrote in a note.

"But as we move into 2022 and markets observe ongoing above trend growth and begin to speculate on some adjustments in monetary policy real yields should go positive. The further 60 basis point increase in 2022 would see real yields in positive territory in both countries – consistent with a second consecutive year of above trend growth."

Evans admits there are always outstanding risks with such forecasts but with growth prospects improving, central banks committed to maintaining stimulus, and inflationary expectations back to more normal levels gradual net increases in bond rates can be expected..

LATEST SNIPPETS

Australia AOFM’s CEO Rob Nicholl To Join IMF

The chief executive of the Australian Office of Financial Management Rob Nicholl is leaving to join the International...

Published on : 22 Jul 2022 , 04:34 PM
RBA Lowe's speech on Wed not under embargo

RBA Governor Philip Lowe will deliver a speech on July 20, but the speech will not be released under embargo, the RBA...

Published on : 19 Jul 2022 , 04:03 PM
RBNZ Hike 50bps to 2.5%

The Reserve Bank of New Zealand raised the official cash rate by 50bps for the third meeting in a row, taking the rat...

Published on : 13 Jul 2022 , 12:57 PM
RBA raises cash rate 50bps to 1.35%

The Reserve Bank of Australia has increased the cash rate target by 50bps to 1.35%, marking two consecutive 50-basis-...

Published on : 05 Jul 2022 , 03:03 PM
Westpac also ups RBA cash rate forecast to 2.1% by Dec (from 1.75%)

Westpac chief economist Bill Evans has raised his forecast for RBA cash rate, now expecting the policy rate to end 20...

Published on : 07 Jun 2022 , 05:21 PM
CBA ups RBA rate forecast; sees 2.1% year-end, with risk of 2.35%

Economists at Commonwealth Bank have revised higher their forecast for RBA cash rate, now expecting the rate to reach...

Published on : 07 Jun 2022 , 04:58 PM
NAB ups RBA cash rate forecast to 2% by Dec (from 1.35%)

Economists at National Australia Bank are revising up their RBA cash rate forecast following the 50bps hike on Tuesda...

Published on : 07 Jun 2022 , 04:15 PM
RBA raises cash rate 50bps to 0.85%

The Reserve Bank of Australia raised the cash rate target by 50bps to 0.85%. The rate on Exchange Settlement balances...

Published on : 07 Jun 2022 , 02:47 PM
Australia net export to subtract 1.7 points from Q1 GDP

Net export will detract 1.7 percentage points from Australia's March quarter GDP, data published by Australian Bu...

Published on : 31 May 2022 , 11:44 AM
RBNZ Ups OCR 50bps to 2.0%

The Reserve Bank of New Zealand raised official cash rate by 50bps to 2.0%, as widely expected and issued hawkish pro...

Published on : 25 May 2022 , 12:15 PM