After rising in the first four months of 1992, long-term bond yields are set to decline through the rest of the year, predicts economist Lacy H. Hunt of HongKong Bank Group. His reasons: persistent monetary weakness, a sharp slowdown in housing construction after the first-quarter surge in starts, drops in inflation-adjusted retail sales in March and April, and a continuing decline in real commercial bank lending.
Economist Edward Yardeni of C.J. Lawrence Inc. also points to a startlingly consistent seasonal pattern. "In every year since 1987," he notes, "long-bond yields rose in the first few months of the year but then weakened considerably toward the end of the year."