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Vaccines will ‘boost confidence dramatically’ and lift Treasury yields in 2021, Wells Fargo predicts

Wells Fargo Securities is pushing a bearish case for the prices of bonds in its official 2021 outlook.

Michael Schumacher, the firm’s head of macro strategy, expects the 10-year and 30-year Treasury Note yields to move meaningfully higher due to progress against the coronavirus.

“In a word, it’s vaccines,” he told CNBC’s “Trading Nation” on Monday. “As vaccine distribution picks up, we think it’s going to boost confidence dramatically. That’s when you see a lot more hiring going on. Importantly, that’s when policymakers should become a lot more comfortable with yields ticking up a bit.”

Now Schumacher’s base case has the benchmark 10-year yield between 1.15% to 1.35% by 2021′s halfway point. That implies a 23% to 50%% increase from Monday’s close.

Reference: CNBC