Bloomberg’s Michael Rosenberg believes that U.S. bond yields are presently priced “for an anemic economic recovery.”
According to Rosenberg, “bond yields appear consistent with U.S. nominal GDP growth averaging around 3% for the next two years, nowhere near the 5% projected by private-sector economists and the FOMC. Something has to give here. Either forecasters will need to revise their forecasts lower, or U.S. bond yields are at risk of moving sharply higher.”
Given the failure to confirm trends that bond yields could take in the future, Rosenberg suggests that greater caution on the part of investors is warranted.
“Indeed, in a world where market expectations are not firmly anchored and where the economic outlook is “unusually uncertain”, a defensive posture appears to be the prudent course from here on.”