What’s going on here?
Upcoming economic reports and Fed Chairman Jerome Powell’s Congressional testimony could break US government bonds out of their narrow trading range.
What does this mean?
Yields on US 10-year Treasuries have been bouncing between 4.20% and 4.35% since mid-June, resting at 4.33% on June 28. Economic data hasn’t made it clear how deep this year’s potential Fed rate cuts might be, keeping Treasury yields steady. Futures tied to the fed funds rate show traders pricing in just under 50 basis points of rate cuts for the year. Analysts suggest only a significant rise in the unemployment rate would drive yields notably lower. Next Friday’s employment data might spark a bigger market response due to low liquidity during the US Independence Day week, according to GenTrust.
Why should I care?
For markets: Economic forces in play.
Fund managers are the most underweight in bonds since last November, according to BofA Global…
