Argues that the euro area is moving further towards "Japanification"
The firm says that with inflation staying low and the ECB preparing for lower rates, bund yields still have some way lower to go from current levels. Adding that:
"The read-across from Japan, where the debt overhang and demographics have contributed to the low-for-longer outcome, is central to our views. Japanification means permanently low yields and flat curves."
In case you missed it, the entire German sovereign yield curve switched over to negative territory for the first time ever at the end of last week.
At the same time, the firm also cuts its year-end forecast for US Treasury 10-year yields to 1.50% from 2.10% previously.
The issue with these forecasts is that they're almost always a little too late. Just take how almost every economist was forecasting US 10-year yields to head towards 3.20% or higher at the start of last year before revising them downwards as the months roll along.
