“If inflation settles at 2.5%, then central banks are likely to set interest rates around 50 to 100 basis points (bps) above inflation to keep consumer price rises in check,” reads BOS’s 2024 Supertrends: World In Transition report, released at the private bank’s inaugural CIO Summit on July 17. “Investors buying long-term 10Y+ bonds will likely demand a further premium of 50-100bps.”
The US Federal Reserve will likely keep interest rates higher for the remainder of the 2020s on the back of stronger inflation, according to Bank of Singapore’s (BOS) latest mid-year outlook.
For the rest of the 2020s, BOS thinks 10-year US Treasury (UST) yields will average around 4.00% compared to the 2.5% average seen between 2008 and 2020.
