Reuters poll: Significant global bond market correction is likely in next three months

Reuters came out with the June 17-24 survey outcome of 41 fixed-income strategists during early Friday.

While the bond market strategists initially expect a drastic correction in the next three months, they also forecast “modestly higher yields in a year.”

Additional findings…

The U.S. 10-year Treasury yield was forecast to rise about 50 basis points to 2.0% by June 2022, from around 1.5% on Thursday.

Those views line up with a separate poll of foreign exchange strategists which predicted the dollar to weaken over the 12-month horizon, suggesting an outlook across asset classes that monetary policy would remain accommodative.

Asked when the Fed would announce a taper plan for its $120 billion per month asset purchases program, roughly three-quarters of respondents, or 33 of 44, predicted it by September.

About the same proportion, 31 of 40, said the central bank won't start cutting monthly purchases until early next year.

When asked how high would U.S. 10-year Treasury yields rise over the next three months, the median of 30 analysts was 1.75%, with forecasts ranging between 1.5% and 2.0%.

Market implications…

Given the positive correlation between the US dollar index (DXY) and Treasury yields, the aforementioned survey can keep the greenback buyers hopeful. That said, the DXY snaps a four-week uptrend despite the gradual recovery since Tuesday, currently around 91.84.