Bank of America Says 5% Yield Requires Sentiment Boost
- Bond market needs conviction on economy to push yields higher
- Higher Fed neutral rate and term premium key to reaching 5%
A Bank of America branch in New York.
Photographer: Mark Kauzlarich/BloombergThis article is for subscribers only.
The 10-year Treasury yield reaching 5% depends on whether investors are convinced the economy will continue to strengthen and that the Federal Reserve will keep interest rates high for longer, researchers at Bank of America said.
Treasury yields resumed climbing Wednesday, with benchmark rates across the curve up 6 to 10 basis points. The 10-year yield rose 10 basis points to 4.64%, a fresh high from October 2007. A broad market retreat gained traction from a rally in US crude oil futures that is seen fanning inflation pressure and from bearish sentiment that the central bank will need to keep borrowing costs high for longer.