U.S. May Suffer Japan-Style Deflation, Schroder Says

The U.S. is no longer an engine for the global economy and may suffer deflation sometime in the next three years, said Genji Tsukatani, head of fixed income at the Japanese unit of Schroder Investment Management Ltd.

Ten-year Treasury yields slid to a 16-month low after the Federal Reserve said yesterday the U.S. economic recovery will be “more modest” than previously anticipated. The spread between yields on U.S. and Japanese 10-year debt is at the narrowest since May 2009.