How useful is nominal GDP as a guide to bond yields?

One approach to forecasting long-term government bond yields is to assume that they should normally match the rate of growth of nominal GDP. For example, this approach is currently being used by some to support forecasts that 10-year US Treasury yields (now around 3.5%) will rise to between 4% and 5% this year and then settle there. In contrast, we continue to expect the yield on 10-year Treasuries to fall back later this year and to average around 2.5% in 2012.