Sources of rising bond yields

March 7, 2018

There are a range of sources of rising bond yields:

For a view on how far bond yields will rise over the next 12 months, let us turn to highly regarded economist Ken Rogoff ( https://en.wikipedia.org/wiki/Kenneth_Rogoff ) from the AFR Business Summit 6/3/2018:

So Ken Rogoff sees US 10 year bond yields up 1% over the next 12 months 3.9% from the current 2.9%..... which is also up from 1.4% in July 2016. This means that:

  • While a US bond of 10 years duration last lost 13% of capital value since July 2016, 

  • this same bond would lose another 8% over the coming year.

  • Keep in mind that all US assets are priced off US government bonds.  So this bond yield rise has significant negative ramifications for all US asset prices.

https://www.businessinsider.com.au/chart-5000-years-of-interest-rates-history-2016-6?r=US&IR=T   

 

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