Calls Persist for Negative U.S. Yields Even as Fed Signals Pause
- Belly of curve could go below zero by 2021: BofA’s Braizinha
- Moody’s Analytics also raises prospect of sub-zero yields
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The Federal Reserve may be hinting at a pause in its policy easing, but Bruno Braizinha at Bank of America Corp. sees a risk that yields on some Treasuries will go negative by 2021 as the U.S. central bank cuts rates all the way to zero.
While that may seem like a remote scenario to some, the strategist says the market can’t ignore the possibility that 5- and 7-year yields -- both presently within a few basis points of 1.60% -- could fall below zero. He says now’s the time to hedge against that prospect.