New market forecasts – even lower Treasury yields ahead

We have reviewed our projections for currency, government bond and stock markets. The new market numbers are presented in the table on the next page. There are two main changes. First, we are revising our year-end forecast for the 10-year US Treasury yield to 1.5% from 2% and expect the yield to remain around this level through 2013. Second, we think the euro could depreciate more substantially and more quickly against the dollar than we had previously envisaged. We have also tweaked our forecasts for equities, but not exclusively down.