US Treasury won’t grow much until 2023: Vanguard
By Aditya Raghunath
Investing.com – There have been fears about rising US Treasury yields and fears of a pickup in inflation. However, the US Federal Reserve has repeatedly said that all inflation is likely to be short-term and will not raise interest rates until it is satisfied with the state of the economy. American economy. The Fed has said the economy is not where it wants it to be and there is still time for interest rates to rise.
How long? Until Q3 2023, according to economists at investment management firm Vanguard. The Vanguard Group has $ 7.2 trillion in global assets under management.
In a May 21 blog post, Alexis Gray, M.Sc., senior economist at Vanguard Asia-Pacific, said increases in bond yields are expected to be modest. The blog indicates that the US Fed is likely to raise the key short-term interest rate in the third quarter of 2023, which is still two years away.
He says: “Our view that the take-off of the current low policy rates could occur in some cases in just two years reflects, among other things, only a gradual resumption of the significant effect of the pandemic on labor markets. “
He added: “… we expect higher policy rates and smaller central bank balance sheets to only cause yields to rise slightly. And we expect that, for the remainder of the 2020s, bond yields will be lower than they were before the global financial crisis. “