Pimco Sees Bernanke-Style Saver Glut Capping 10-Year Yield at 3%
- Ten-year yields will struggle to push past 3%, Pimco says
- Bernanke's theory says savers funnel money into Treasuries
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Pacific Investment Management Co., home to the world’s biggest actively run bond fund, says the savings glut that dictated the direction of the bond market a decade ago is keeping borrowing costs down again in 2015.
Individuals preparing for retirement and emerging nations that are accumulating funds will drive more money into savings, Joachim Fels, an economic adviser at Pimco and the former chief economist at Morgan Stanley, wrote in a report this week. Under a theory advanced by former Federal Reserve Chairman Ben S. Bernanke in 2005, people then funnel the money into Treasuries, helping keep yields down.