New York

TWO of Wall Street's biggest banks are forecasting divergent paths for Treasuries in the last three months of 2016 as strategists weigh the effects of improving US economic data and stimulative central-bank policy abroad.

Economists at Goldman Sachs Group Inc see benchmark 10-year yields climbing to 2 per cent by year end, fuelled by an improving outlook for inflation and economic growth. By contrast, Morgan Stanley is forecasting yields will fall to 1.25 per cent amid accommodative global monetary policy and continued demand for haven assets.