Dr. Gil Feiler, CEO of Info Prod Research and author of Rethinking Business Strategy in the Middle East for the EIU, predicted Tuesday that the average price per barrel for oil would be USD 75 by the end of 2006. As for the global economy, Dr. Feiler reveals bearish outlook to the USD against major currencies. He estimated that the Euro will continue to rise to over USD 1.31 by the end of 2006 and 1.34 by mid 2007. The GBP will rise to 1.92 by mid 2007, Japanese Yen per USD will strengthen to 106, and the Swiss Franc will rise to SF1.14 per USD by mid 2007.
Dr. Feiler sees higher bond price and decreasing yields. As for the 10 year government bond, yield to decrease by 40 basis point to around 4.50 percent by mid 2007. 30 year government bond yield will decrease at a slower pace, thus positive spread will be maintained and no inversion curve is forecasted by the end of 2007. No inversion curve is forecasted also in the 10 years – 2 years Government Bond Yield Spread.
As for the Fed Funds Target Rate, Feiler sees no change in 2006. Nevertheless in mid 2007 a decrease of 75 basic points is expected to 4.50 percent, due to slower growth rates.
