economy

Oxford economics warns bond yields could jump next year

Oxford economics warns bond yields could jump next year

The Treasury bond market has taken the Federal Reserve’s reducing its asset buying with relative calm so far and yields haven’t shown a huge reaction. But that could change next year and present a challenging situation for the central bank. “Declining Treasury demand from investment funds raises the risk of higher rates and volatility in 2022, particularly as the Federal Reserve winds down [quantitative easing] purchases, John Canavan, bond analyst at Oxford Economics, writes in a report. “While foreign Treasury demand has been offsetting a portion of the shrinking investment fund purchases, we don’t expect it will be strong enough to compensate for the decline in both investment fund and Fed purchases next year, he adds, noting that “we anticipate a gradual increase in the 10-year Treasury yield through 2022 to around 2.25% at year-end. Late Monday, the 10-year note was at 1.40%. Download.

economy 2021-12-14 Livemint