Slower global output growth may prompt bond yield fall

Bond yields are likely to drop in the second half of this year in anticipation of slower global outp...

Bond yields are likely to drop in the second half of this year in anticipation of slower global output growth, says Tony Dolphin, director of economics and strategy at Hendersons. Looking to the UK in particular, Dolphin says index-linked yields appear to be overvalued, something that reflects strong demand, which he feels is likely to persist. "Slow consumer spending growth is likely to prompt a cut in UK rates towards the end of the year and high yield bond spreads are expected to widen modestly as the economic newsflow deteriorates," he notes. On a global scale, Dolphin says GDP growt...