Predictions for the 10-year have been embarrassing

Treasury yields have come roaring back after a scramble for safety on February 11 pushed yields to their lowest levels since July 2012.

On that day, the benchmark 10-year yield touched 1.53% as the major US stock averages pressed to 21-month lows amid fears major European banks would convert their contingent convertible bonds, or Coco bonds, into equity.

Since that day, the US 10-year yield has rallied more than 40 basis points and is threatening to break back above the 2.00% level for the first time in nearly two months.

So where is the 10-year going from here?

A recent survey of economists conducted by Bloomberg found a consensus estimate of 2.00% for the end of the second quarter.

That seems to jive with the Barclay’s Global Macro Survey, which saw about two-thirds of respondents call for between 1.75% and 2.25%.

However, economists’ track records haven’t been too good when it comes to their 10-year guesses.

HSBC notes the benchmark yield has undershot forecasts almost every year since 2000.

The firm likens this to Japan’s “lost decades” when forecasters were continuously over confident an economic recovery — and higher bond yields — was just around the corner.

As inflation fell further and further from the Bank of Japan’s 2% target, so too did Japanese yields despite economists’ forecasts.

Of course not everyone thinks yields are going to rise, but less than 5% of respondents to Barclay’s survey see the 10-year falling below 1.50% by the end of June.

That camp would also likely include bond gurus Gary Shilling and Komal Sri-Kumar, who both predict the yield will set a new record low at 1.00% before this cycle is over.

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