Bonds: Downside for government bond yields – ABN Amro
Central bank purchases, deep recession and disinflation will push down on yields, according to economists at ABN Amro.
“We remain of the view that core eurozone bond yields and US Treasury yields will decline.”
“Although the government announcements imply large amounts of extra supply, we think that the impact on yields will be more than offset by central bank purchases, the deep recession and eventual disinflation.”
“When the crisis fighting is over, both the ECB and the Fed will still be faced with an inflation issue. In particular, the deep recession that we have now entered will over time lead to disinflation.”