J.P.Morgan sees global bond yields dipping in 2023
Comment of the Day

November 25 2022

Commentary by Eoin Treacy

J.P.Morgan sees global bond yields dipping in 2023

This article from Reuters may be of interest. Here is a section:

Global bond yields will likely fall slightly in 2023 as the balance between demand and supply will improve by $1 trillion, strategists at J.P. Morgan said in a note.

There will be a $700 billion contraction in global bond demand next year compared to 2022, while bond supply will likely drop by $1.6 trillion, J.P. Morgan strategists, led by Nikolaos Panigirtzoglou, estimated in the note issued on Thursday.

"Based on the historical relationship between annual changes in excess supply and the Global Aggregate bond index yield, a $1 trillion improvement in the demand/supply balance would imply downward pressure on Global Aggregate yields of around 40 basis points," the Wall Street bank said.

J.P. Morgan said that while major central banks trimming their balance sheets in 2022 was the single largest contributor to deterioration in bond demand, sell-offs by commercial banks and retail investors were also much higher than estimates.

Eoin Treacy's view

There is a strong likelihood inflationary pressures will fall next year. There are three major reasons for believing that.

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