EFTA Document EFTA01458976

8 December 2015 World Outlook 2016: Managing with less liquidity Bond Market Strategy: Peak policy divergence The divergence between US and European monetary policy may have peaked. Our year-end forecasts have 10Y Bund at 1.1% and 10Y UST at 2.50%. • In Europe, absent an external shock, the market is likely to focus in H2 on the prospects of the ECB discussing (but not implementing) taper. The curve should steepen as the front-end should remain anchored. In the US, the terminal rate pr