Epstein Secrets

re 21: Syr. 10yr, 30yr Treasury yields SO a5 l0 15 to I 25 16 201 10 1.51 12 10 1.0 00 0.5 06 00 O 0 0 0 ra N td is et eh et a ws US Treasury Yields (%) 5).• Sates fah, Detactio Ss* Figure 20: 10yr real rates and inflation breakeven or? 08 04 02 00 42 44 ob OS n0 21111$ tialii

22 May 2015 US Equity Insights How 10yr yields react to Fed hikes is the key to S&P PE IFigure 19: 10yr Treasury yields 9.2 3.0 2.8 26 2.4 2.2 20 1.6 1.8 el 4, to el n an 3.2 3.0 2.8 2.0 24 2.2 2.0 1.5 1.8 in 4

ieve that 2016 should see a partial convergence of US and European bond yields. Our end-year forecasts see the 10-year Bund around 1.1% and 10-year US Treasury at 2.5% (although our macro forecast—with the Fed on a slow but steady uptrend — may be consistent with a somewhat higher yield by end 2016). In Eu

osure European Credit Strategy To follow the US or march to its own beat? US Equity Strategy Still low Treasury yields despite Fed hikes to boost S&P PE — Heavy tilts to Health Care & Tech European Equity Strategy 7% upside in 2016 but beware of the risk of a near-term correction FX Strategy Plen

10yr Treasury - TIPS spread 5yr Treasury yield 30yr Treasury yield Fed Fund Rate 2015 End (Futures) Fed Fund Rate 2016 End (Futures) Duration US Treasury yield curve slope (10-2yr) US Treasury yield curve slope (10-5yr) Credit Corporate IG credit spreads (bps) Financial Industrial Financial sprea

big-cap banks and select retailers 3) Commodity and industrial capital goods producers, prefer Transports Risk of near-term correction: Moderate "S&P PE stands on the shoulders of bonds 2014A $118 17.4 $38 2015E $119 17.4 $41 2016 end target: 2250-2300 2016E EFTA01476449 $125 18.2 $44