LONDON: Swiss investment bank UBS slashed its forecasts for bond yields in the United States and Germany on Thursday, citing expectations for slower growth and weaker inflation.
UBS, which had the highest forecast for German Bund yields in a Reuters poll conducted in November 2015, now sees the 10-year euro zone benchmark at 1.1 percent at the end of 2016, compared with 1.7 percent previously.
The median forecast in the Reuters poll, which had a 12-month horizon, was 1 percent, and the lowest was 0.1 percent.
UBS also cut its end-2016 forecast for 10-year yields in the United States to 2 percent from 2.5 percent.
Among the factors behind the changes, the banks' analysts cited slower growth in the United States, expectations for fewer rate hikes from the Federal Reserve and lower inflation in the euro zone due to oil price falls.
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