Report
Why US long-term interest rates may remain persistently below inflation
We believe that US long-term interest rates will remain persistently lower than inflation (in a year’s time, a 10-year interest rate of around 2% and inflation of around 3% in the United States). But how is this possible? Because the stock of bonds held by the Federal Reserve will remain very high, and it is the stock of bonds that influences long-term interest rates, not bond buying flows; Because the Federal Reserve will keep short-term interest rates also below inflation; Because US inflation does not matter to non-resident buyers of US Treasuries, of which there are many; what matters is the level of US nominal interest rates.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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