The U.S. credit-rating downgrade Friday has broad implications for its economic outlook, Bank of Singapore’s Mansoor Mohi-uddin said in a research report.
“First, America’s deteriorating finances reinforces our view that long-term U.S. Treasury yields will rise over time,” said the chief economist. The bank continues to forecast 10-year Treasury yield to hit 5.00% over next 12 months.
Second, threats to Treasurys’ safe-haven status underscore the bank’s view that the greenback has peaked.