Goldman Sachs ups US 10-year Treasury yields forecasts to 3.25% by 2018-end

In its latest research note, analysts at Goldman Sachs raised their benchmark 10-year government bond yield forecasts for the US, Germany and the UK.

Key Points:

US yields now seen at 3.25% by year-end, previous forecast 3%

German bund yields to rise to 1%, previous forecast 0.8%

UK gilts seen at 2%, previous forecast 1.8%

Peak level for US yields still seen in 3.5% - 3.75% area

Bond valuations are "still fairly stretched"

US 10-year yields sitting at 3.7% would be "fair value" at year-end using their economic forecasts

Diminishing "subsidy" from central bank stimulus will send term premiums higher.