The battered U.S. bond market is finally receiving positive momentum. A confluence of market factors blamed for the recent selloff appears to be losing steam, raising hopes that rising bond yields may stabilize. Rising yields previously spread to mortgage and other debt markets, intensifying the selloff in Treasurys.
Now, analysts suggest the cycle of quirks driving the decline is petering out. Specifically, mortgage bonds are seen as extended, reducing pressure on holders to hedge by selling Treasurys. Furthermore, Goldman Sachs analysts note that switch risks in U.S. futures likely contributed to the selloff, but their influence has clearly diminished.
These developments signal a potential pause in the recent turbulence affecting fixed income assets.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing