Capital markets

Movements on international bond markets will be shaped in 2010 by prudent steering against the current of the prevailing expansionary monetary policy on the part of central banks. Furthermore, market players will have to focus on increased sovereign default risks and it remains to be seen whether the early phase of economic easing in developed countries will be sustained for the long term. In the first half of the year the economic ratios for the major currency zones will likely lead to a slight increase in long-term yields. As the year progresses the anticipated slowdown in growth as well as inflationary expectations – which are growing in prominence given the substantial money supplies – should be reflected in greater volatility in mid- and long-term yields. Since central banks will probably have little room for manoeuvre, yield curves are expected to remain very steep.