BlackRock: Why tapering won’t cause bond armageddon


Bond yields have jumped as investors grappled with the implications of the Federal Reserve slowing its bond-buying programme but BlackRock’s Russ Koesterich does not see them advancing much further.

Yesterday saw the yield on 10-year US treasuries reach a 22-month high of 2.47 per cent after Fed chairman Ben Bernanke said the central bank could ease the pace of its $85bn-a-month quantitative easing programme later this year.

However, BlackRock chief investment strategist Koesterich says: “Even if the Fed scales back its pace of bond purchases in the second half of 2013, investors shouldn’t expect rates to finish the year much higher than where they are today. My expectation is that by year’s end, the yield on the 10-year treasury will be trading somewhere between 2.25 per cent to 2.5 per cent.”

Click to discover why tapering will not cause armageddon in the bond market