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Bond World to Steepen in 2020 in Morgan Stanley’s Top Trade Call

  • German yield curve steepener among firm’s 2020 trade bets
  • U.S. curve seen moving further away from inverted state

A multi-year trend of flattening sovereign debt curves will end in 2020 with the gap between German yields set for sharp steepening, according to Morgan Stanley’s top market bets.

A pattern of longer-dated bond yields climbing faster than short-term ones has already been underfoot in recent months. That comes as the Federal Reserve and European Central Bank are seen pausing on further policy easing after cutting interest rates, while threats to the global economy from the U.S.-China trade conflict and Brexit are also dimming to give a lift to long-end yields.