Obama Clashes With Yield Shows Bonds Below Growth Outlook

As President Barack Obama starts his second term, the bond market is already telling him that the administration’s forecasts for economic growth over the next four years are too optimistic.

The Office of Management and Budget predicts yields on 10-year Treasury notes will rise to average 4.1 percent in 2015 and 4.9 percent in 2017 as the economy expands at about a 4 percent rate in the second half of Obama’s term. Bond prices suggest the yield, now at about 2 percent, will average below 3 percent two years from now, implying that gross domestic product will fall short of OMB projections, according to data compiled by Bloomberg.