Bond Markets Are Underestimating the Fed, Goldman and Pimco Warn
- Both firms warn traders aren't prepared for Fed rate increases
- Goldman's Hatzius sees 10-year yield rising to 3% by year-end
Goldman, Pimco: Traders Aren't Ready for Fed Hikes
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Goldman Sachs Group Inc. and Pacific Investment Management Co. say bonds are poised to fall and traders aren’t prepared for how far the Federal Reserve will raise interest rates.
“Ten-year yields are likely to go up,” Jan Hatzius, chief economist for Goldman Sachs, said at a conference in Sydney. The “bond market is underestimating to a significant degree the amount of monetary normalization that we’re likely to see.” The benchmark yield will rise to about 3 percent by year-end, he said, from 1.91 percent Thursday.