The yield of the North American Treasury bond remains on the rise and at levels of 4.77% amid the solidity shown by the country’s economy.
He performance of the bond of the Treasure The US 10-year bond remains on the rise and at levels of 4.77%, which could lead to it touching a key level of 5%, given the solidity shown by the economy of the country, which cooled expectations of new rate cuts by the Federal Reserve (Fed).
“We believe that 10-year US Treasuries likely to hit 5%. However, if we take a medium-term view, yield levels will probably end up looking attractive at these levels,” explained Danny Zaid, manager at TwentyFour Asset Management, a Vontobel boutique.
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However, he stressed that he sees a significant rally at least in the short term. “The rate move, while significant, is largely justified given the current economic context,” added Danny Zaid.
In this sense, the official employment report for December, published last Friday, showed the creation of 256,000 new jobs.
The Fed: the key to knowing how this story continues
From Vontobel, they assure that “if we look at the market at this moment, we are considering less than two cuts for next year, which is the Fed’s base case based on its economic projection summary that was released in December.”
But experts say that The Fed’s decisions will depend on data in the future. What’s more, the market discounts, with a 97.3% probability, according to the CME Group’s FedWatch tool, that the organization will make a pause in its monetary easing process during its meeting on January 29.
“The main conclusion for us is that The ‘higher returns for now’ narrative is here to stayand that the central bank can afford to be patient until something changes in the economy. Next month, we will be attentive to any major revisions, taking into account that January can bring with it seasonal factors that can add uncertainty to the figures,” Zaid concludes.
Source: Ambito
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