Twice a year we undertake an analysis of real interest rates for our publications Consensus Forecasts and Asia Pacific Consensus Forecasts (in May and November) and the resulting tables and analysis are displayed in both the hard-copy and PDF versions of the publications. Our analysis focuses on both short-term and long-term interest rate expectations.

Consensus Forecasts Asia Pacific
Consensus Forecasts
United States Canada Australia New Zealand
Japan Netherlands China Philippines
Germany Norway Hong Kong Singapore
France Spain India South Korea
United Kingdom Sweden Indonesia Taiwan
Italy Switzerland Japan Thailand

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The table below shows a portion of the data from one of our surveys for 10-Year Real Interest Rates (from our November 2016 Consensus Forecasts survey), together with some textual analysis from the same publication.

10-Year Real Interest Rates
All yields as of November 7, 2016 10-Yr Fixed Rate Instrument Nominal 10-Yr Bond Yield, % 2017 Consensus Inflation Forecast "Real" Interest Rate, % 10-Year Consensus Inflation Forecast, % 10-Year Real Interest Rate, %
 United States Treasury 1.50%, Aug. 2026 1.8 2.3 -0.5 2.2 -0.4
 Japan Govt, 0.10%, Sep. 2026 -0.1 0.4 -0.5 1.1 -1.2
 Germany Bundesrep. 0.50%, Feb. 2026 0.1 1.6 -1.5 1.7 -1.6
 France O.A.T., 0.25%, Nov. 2026 0.5 1.2 -0.7 1.6 -1.1
 UK Treasury, 1.50%, Jul. 2026 1.2 2.5 -1.3 2.1 -0.9
 Italy B.T.P., 1.25%, Dec. 2026 1.7 0.8 0.9 1.5 0.2
 Canada Govt, 1.00%, Jun. 2027 1.3 2.0 -0.7 2.0 -0.7

Our regular analysis of real, i.e. inflation-adjusted, interest rates in twelve of the world’s industrialised economies compares the range of current long-term, 10-year government bond yields (see table above) with levels from our survey exactly six months ago. The chart (right) shows that 10-year real interest rates for most have dropped further in this period. Eleven out of 12 countries’ real interest rates are below zero. Six months ago, part of the reason for this was the sharp drop in nominal bond yields as investors crowded the bond markets. However, as recently as October there have been sell-offs of 10-year government bonds on the back of central banks becoming less supportive of ultra-loose monetary conditions. The US Fed is earmarking another possible target rate hike at its December meeting. All this pushed up the yield of some nominal bonds, and could herald the beginnings of slow correction in the bond markets. While our snapshot of bond yields was taken on November 7 – before the US election – since then, bond yields have surged even further, amid the shock result and expected greater financing demands if president-elect Trump goes ahead with his promise of increased defence and infrastructure spending. What has kept real interest rate estimates low has, of course, been the fact that nominal yields were already so weak to begin with that even extremely muted inflation rates managed to outstrip them. Global demand has not recovered from the 2008 financial crisis, adding to the stagnating environment. The Fed’s pullback in quantitative easing, meanwhile, contributed to the downturn in oil and commodities.

A portion of text from Consensus Forecasts, November 7, 2016.