As investors reprice the risk of U.S. capital, the term premium—the additional yield investors demand to hold a long-dated bond rather than a short-dated one—has climbed to the highest in more than a decade, said Pictet Asset Management in a note.
The asset manager calculates that the premium could rise at least another 25 basis points from the current level.
“Calculating it is a complex task as it encompasses several different factors ranging from market sentiment and monetary policy to political uncertainty,” it said.
