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Has the Fed driven down the term premium on US Treasuries?

We think the Fed has been instrumental in the collapse of term premiums on long-dated Treasuries and that the effect of its actions will not be unwound soon. If we are right, and other depressing influences on term premiums are not reversed either, yields may not rise substantially even as interest rates are raised. Our end-2015 forecast for the 10-year yield is 2.5%, compared to 1.8% now.

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