By Edward H. Ladd, Chairman Emeritus
Thomas F. Fahey, Vice President
David B. Chittim, Senior Vice President
Standish Mellon’s annual five-year forecast predicts a relatively flat yield curve persisting through 2007. Afterwards, short- and medium-term rates are expected to subside, resulting in a more typical, upward-sloping yield curve. The report anticipates a gradual, modest increase in long-term rates, with the 30-year Treasury bond plateauing at 5.50% in years 2008-2010.
Prospective Returns also sees modest returns from stocks, somewhat below long-term historical averages. Predicted returns are summarized below:
| |
Average Annual
Return (%)
|
| U.S. Real GDP |
3.50 |
| Consumer Price Index |
2.25 |
| Cash Equivalents |
4.55 |
| Intermediate Bonds |
5.45 |
| International Bonds (hedged) |
4.90 |
| Emerging Market Bonds |
6.90 |
| Large Cap U.S. Equity |
8.50 |
| Small Cap U.S. Equity |
9.00 |
| International Equity |
9.00 |
| Emerging Market Equity |
11.00 |
| Real Estate |
4.00 |
| Venture Capital |
9.50 |
| Absolute Return |
9.50 |
| Municipal Bonds (after-tax) |
6.25 |
| High Yield |
6.50 |
| TIPS |
4.95 |
| Commodities |
7.00 |
| Local Currency EM Debt |
8.00 |
For a full copy of this 22-page report, please contact Alex Over, Managing Director, Sales, Marketing and Client Service at 617 248-6339.
This information is the property of Standish Mellon Asset Management Company LLC, and shall not be sent to any third party. This information is not provided as a sales or advertising communication. It does not constitute investment advice. It is not an offer to sell or a solicitation of an offer to buy any security. Past performance is not an indication of future performance. This information is not intended to provide specific advice, recommendations or projected returns of any particular Standish Mellon product.
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