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US government bonds still fundamentally sound

The recent rise in 10-year US Treasury yields has taken them further away from our end-2011 forecast of around 1.5% (at the time of writing they are around 2.15%). But we continue to expect yields to fall back to 1.5% over the next few months and to average around this level over the next several years as well, with some lengthy periods where yields are even lower.

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