Yardeni Research: 5% Is an Attractive Yield for 10-Year U.S. Treasuries

Yardeni Research President Ed Yardeni said he expects bond yields to be at 5% at the end of this year, at the end of next year, and for the foreseeable future. According to Sina Finance, Yardeni said interest rates have returned to normal levels and would stay there for longer, describing 5% as a normal rate consistent with a well-performing economy. He said buying 10-year U.S. Treasuries at a 5% yield requires optimism that productivity will bring inflation down, which he believes will happen. Yardeni put inflation expectations over the next decade at about 2%-2.5% and said a 2.5% real return would be good in the bond market. He said coupon income would outpace inflation, although stocks would outperform bonds over the long term. Yardeni expects 10-year yields to fluctuate between 4% and 5%, a range comparable to the period before the global financial crisis.