Bank Of America Mark Near-Term 10-Year Yield Calls Lower

Bank of America have lowered their "10-Year yield forecast to 1.45% from 1.90% for the end of 2021 in light of near-term uncertainty to the outlook from the virus situation and global re-pricing."

• They expect "10-Year yields to rise and reach 1.80% (previously 2.00%) in H222 as the Australia economy bounces back swiftly. The recent support for global bonds has pushed yields lower and Australian long-end bonds are now looking inconsistent with the medium-term economic outlook and with RBA tapering still likely."
• They see "Australian & U.S. 10-Year rates mostly moving together, but with a slight tightening bias due to a more reactive RBA vs. the Fed. We continue to assume the RBA would prefer to follow Fed moves to avert unwelcome tightening of financial conditions via the currency. Excess liquidity will keep 3-month BBSW and 2-Year bond yields low out to Q222. We expect swap spreads to remain wide. A risk to our forecast is a longer than expected continuation to global risk-off sentiment and growth downgrades."