HSBC’s Steven Major was one of the very few interest rate gurus to correctly forecast the fall of Treasury yields in 2014.
While most of Wall Street is once again forecasting rates to rise in 2015 as the Fed comes closer to raising rates, Major is once again forecasting a plunge.
According to Bloomberg’s Anchalee Worrachate, Major says the 10-year yield will fall as low as 1.5% to end the year around 2.5%, while 74 forecasters surveyed by Bloomberg see it rising to 3.0% by year-end.
Major, HSBC’s global head of fixed income research, says this year is like the period right after World War II when the global economy was weak. Worrachate also reports that bond purchases by central banks all over the world could keep interest rates low.
Weak wage growth could also keep the Fed on hold for longer than the market currently anticipates. Friday’s jobs report showed that wages fell 0.2% from November to December. December wages grew just 1.7% year-over-year, the smallest monthly increase since October 2012.
The 10-year hit a year-to-date low of 1.88% on January 6, according to Bloomberg. Here’s a chart showing that unexpected plunge last year:
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