The end of the year and commentators everywhere trot out their predictions for next year. We won't be any different, BUT we will go one better and just check our scorecard for last year first...
Here is what I predicted in this column on 21 December 2011:
GBPUSD: 1.65 US 3-month T-bill rate: 0.04 percent
US 10-year Treasury yield: 2.05 percent
UK 10-year Gilt yield: 1.90 percent
So how did we do? Well not too bad in GBPUSD, which is now at 1.62, and not bad at all with the US 3-month T-bill rate, which is today at 0.03 percent. And the U.K. 1-year Gilt yield is…cue drum roll…1.89 percent! So a "B " for that at least, or will readers grade me an "A-" as it's Christmas?
Not so good on the other two predictions though, here are today's values:
US 10-year Treasury yield: 1.72 percent
My problem was I wasn't bearish enough. As the U.S. economy has struggled to get any real momentum in its recovery so Treasury yields have stayed depressed. Then again the U. K. equity market is up on last year, and the U.K. recovery has been even more patchy (I have a tray of cream cakes on with Ross Walker at RBS that the UK's 2012 GDP number has a " " sign in front of it, but I fear he may just edge it and the U.K. will end up with a small negative GDP figure for this year).
Which just goes to show, what do equity markets know anyway?!
For those of you still willing to credit my market pundit qualities, here are my predictions for December 2013:
US 3-month T-bill rate: 0.10 percent
US 10-year Treasury yield: 2.25 percent
UK 10-year Gilt yield: 2.10 percent
In other words, no real change – I've moved recovery on from 2012 to 2013! Apart from the U.K. equity index of course, and in the way of equity markets everywhere they will push on regardless. Let's see how it goes. In reality I expect the same uncertainty, the same drift along the bottom and a resurgence of the euro zone crisis fairly soon. Plus ca change…
Thank you to readers for indulging this column in 2012, we're shutting up shop for the holiday period and normal service will be resumed on Wednesday 9th January 2013. Best wishes for Christmas and a happy new less volatile 2013…
Professor Moorad Choudhry is Treasurer,Corporate Banking Division at The Royal Bank of Scotland.
"The views expressed in this article are an expression of the author's personal views only and do not necessarily reflect the views or policies of The Royal Bank of Scotland Group plc, its subsidiaries or affiliated companies, or its Board of Directors. RBS does not guarantee the accuracy of the data included in this article and accepts no responsibility for any consequence of their use. This article does not constitute an offer or a solicitation of an offer with respect to any particular investment."