NEW YORK (Reuters) - Goldman Sachs (NYSE:GS) said on Monday it was too early to bet on U.S. Treasury prices falling before the outcome of Britain's referendum on staying in the European Union is known as polls showed a tight contest between the two sides.
Investors had scooped up U.S. Treasuries, German Bunds and British Gilts in recent days as they loaded up on lower-risk government debt in case the "Leave" camp wins Thursday's referendum.
Benchmark U.S. yields fell to near four-year lows last week, while German 10-year yield slipped into negative territory for the first time ever. Longer-dated British and Japanese government yields declined to record lows.
"Should Brexit instead occur, government bond yields would most likely fall further reflecting the associated increase in macro and financial uncertainty," the U.S. investment bank's co-head of global macro & markets research Francesco Garzarelli wrote in a research note on Monday.
If "Leave" wins, the 10-year Treasury yield may fall by 30 basis points to 1.35 percent, while the 10-year Bund may decline by 15 basis points to -0.10 percent. The U.K. 10-year yield may slip by 15 basis points, Garzarelli said.
Italian government debt yield would rise to 1.80-2.00 percent, according to the note.
On the other hand, were "Remain" to come out ahead the gilt 10-year yield may rise as much 20-25 basis points from Friday's close. Its U.S. and German counterparts may rise by 20 basis points and 10 basis points, respectively.
Italian yield would fall about 30 basis points, Garzarelli wrote.
On Monday, investors pared their safehaven holdings of these bonds following the latest polls that showed a shift in voter sentiment with renewed support to "Remain" following the killing of parliament member Jo Cox, who was a proponent for Britain stay in the EU.