CNBC Fed Survey: Special ECB Edition
June 4, 2014
Page 3 of 13
FED SURVEY: Special ECB Edition
June 4, 2014 6.
What percent do you ascribe to each of these factors to explain the recent decline in the yield on the 10-year U.S. Treasury note?
Euro zone deflation or disinflation
Ten-year yield is as low as it will be
Two major factors keeping U.S. Treasury yields low: 1) QE tailwind becomes a headwind - removing an important inflation driver 2) U.S. Treasury bonds have a high relative value compared with other sovereign debt options in a low inflationary global marketplace
US Treasuries look cheap compared to other developed sovereign debt
The narrowing of the deficit and shortfall in new Treasury bond issuances relative to expectations
Federal Reserve's statements that interest rates will remain below historically "normal" rates for some time
30% reduced supply of U.S. treasuries as federal deficit shrinks; 20% momentum and the voodoo of chart readers
Correction from oversold condition on bonds late last year and some rebalancing from stocks to bonds because of the huge stock rally the past two years
The bond market is telling us that U.S. growth is going to be very modest. The Fed and consensus are too optimistic.
Stronger bank purchases of U.S. Treasuries due to stiffer liquidity rules implemented at the start of the year
26% 21% 19% 18% 9% 8%
Flight tosafetyLowerexpectationsfor U.S.growthOtherLowerexpectationsfor U.S.inflationExpectedactions bythe ECBLaggedeffects of QEby the Fed