We have revised up our end-2015 and end-2016 forecasts for the 10-year US Treasury yield by 50bp each, to 3.0% and 3.5%. Our previous forecasts for the yield, which is now around 2.3%, had been based on a view that the term premium would remain exceptionally low. This view has been refuted by the large increase that has taken place since the end of January. Meanwhile, we continue to expect the federal funds rate to rise more rapidly than generally assumed.
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