Today we share a chart on expected bond yields. A bond yield is the amount of return an investor realizes on a bond.
Reminder: These charts come to us compliments of independent economist Fritz Meyer, a seasoned economic and markets analyst whose insights appear regularly on CNBC, Bloomberg TV and the Fox Business Network. Here is what Fritz has to say about expected bond yields:
Just as QE <quantitative easing by the Fed> depressed bond yields, it was widely assumed that the end of QE would bring bond yields back up to “normal”, pre-QE levels.
However, that normalization didn’t happen according to the conventional wisdom.
Bond yields declined because inflation was more subdued than even the Fed had been predicting, and because the demand for bonds has been heavy in the face of declining net issuance of new U.S. Treasury bonds and QE in Europe.
Now, with the recovery of inflation and the ECB’s <European Central Bank> announced intention to wind down their QE by year-end 2017, it would make sense for bond yields to start rising to a more normal level.
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