Wall Street strategists are growing optimistic about bonds following a sharp rise in Treasury yields. Goldman Sachs Group Inc. believes the 10-year Treasury note could rebound, citing credit market stress and easing technical risks. Citigroup Inc. favors shorter-term Treasuries, arguing that slowing inflation and weaker wage growth reduce the likelihood of aggressive Federal Reserve rate hikes. “Longer-term forwards are elevated versus fair for most major markets,” Goldman Sachs strategists led by William Marshall wrote, reinforcing the case for attractive duration at current levels.
The 10-year yield stands at approximately 5.24%, down from a multi-decade high after strong demand at last week’s auction. The two-year yield remains stable near 4.8%. However, Bank of America Corp. strategists, led by Mark Cabana, caution that swaps traders may be underestimating the chance of a Fed rate hike later this month, currently pricing in only a 19% probability.
Barclays Capital strategists, including Anshul Pradhan, warn that higher yields alone do not guarantee protection against further increases. Investors are watching this week’s US inflation report, with many expecting core consumer prices to rise 0.2%, signaling a slower pace of growth. Additional rate strategy views from major firms were published throughout the week.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing