U.S. Treasurys could outperform their European peers in the fourth quarter, according to BNP Paribas Markets 360’s forecasts.
They expect yields of developed-market fixed income assets to decline, but more so in U.S. than in Europe. Japanese government bonds are an outlier and aren’t favored, with yields likely to rise, they said.
“Given our view of a limited potential fall in U.S. 10-year yields after a Fed cut, we think 10-year Japanese government bond yields could rise after the Fed moves,” they said.
The Bank of Japan has been raising interest rates while other major central banks are cutting rates or about to start doing so.