Developments, arguments, and opinions about the trajectory of long-term bond yields in the US.
Strategists at Citigroup Inc. upgraded Treasuries to overweight
Joining Goldman Sachs, Barclays, Royal Bank of Canada and Societe Generale who already cut their year-end forecasts for 10-year Treasury yields.
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JPM’s rates team drops 2025 forecast for the yield on the 2yr note to 2.7% from 3.65% and the 10yr to 3.65% from 4.15% previously.
They also see the FOMC cutting to 3.0% starting in June. “Even though we have lifted our full-year core PCE inflation forecast” by 1.4 percentage points to 4.4%, “we continue to expect a first Fed easing in June,” they wrote. “However, we now think the committee cuts at every meeting through January, bringing the top of the funds rate-target range down to 3.0%,” the analysts said, referring to the Federal Open Market Committee.
Ed Yardeni also lowered 10 year target
Yardeni: “The data out this week are likely to add to Trump Tariff Turmoil (TTT) fears and keep stocks on the back foot. We are lowering our range for the 10-year Treasury bond yield to 3.75% to 4.25% (from 4.25% to 4.75%) for the rest of the year as a result of TTT (chart).”
https://x.com/neilksethi/status/1909268931363414264
https://x.com/neilksethi/status/1909285037368877359
Treasury yields are now up +15% since April 3rd while the S&P 500 is down -10%, at 4.5% current
This is not the typical flight to safety response when markets start to priced in a recession and have brutal sell offs
Tariffs inflationary pressures, deglobalization, huge fiscal deficits, fears foreigns nations could start to sell their treasuries as retaliation, are probably among the reasons creating this atypical response this time
This is also the complete opposite direction that the government is after.
https://x.com/KobeissiLetter/status/1909767124131721718?s=19
