Fitch: US inflation and bond yields will rise in medium term

“Inflation trends and associated risks around interest rates and exchange rates may have direct sovereign credit implications,” Fitch Ratings said in its latest report titled ‘Inflation Impact On Sovereigns Depends On Real Interest Rates.”

Key takeaways

“Inflation impact on sovereigns depends on real interest rates.”

“US inflation and bond yields will rise in the medium term. “

“Forecast US inflation to be 2.5% at end-2023 and 10-year treasuries to yield 2.3%.”

“Expect global yields to follow US yields higher though Japan has shown low yields can persist on country-specific factors for an extended period.”