GCB Capital forecasts continued decline in nominal yields amidst macroeconomic improvements
In its latest assessment of nominal interest rates, GCB Capital highlights a noteworthy trend of yield compression, with the Treasury achieving an average reduction of 2.59% thus far in 2024.
Bolstered by a decline in inflation witnessed in February 2024, the outlook suggests a further downward trajectory for nominal yields.
The completion of the second coupon payment on the DDEP bonds is anticipated to contribute to a softening of the Treasury’s appetite for new borrowing, particularly at the shorter ends of the curve.
This adjustment in borrowing dynamics is expected to play a role in sustaining the decline in nominal yields across the T-bill curve.
GCB Capital underscores the relative improvement in the macroeconomic outlook as a contributing factor to this trend.
Additionally, the continued disinflationary trend forecasted beyond March 2024 is expected to reinforce the downward pressure on nominal yields.
GCB Capital’s outlook reflects a cautiously optimistic stance, aligning with broader expectations of sustained economic recovery and stability in the financial markets.
