JPMorgan strategists expect Treasury bonds to return after 'rest'

Bloomberg – The bullish period in Treasury bonds will resume After its current “comfort,” according to strategists at JPMorgan Chase & Co.

The 10-year bond yield is likely to rise from its current level of around 4% due to discretionary selling pressure and trend following, then decline amid… Marko Kolanovic writes about “The Emerging Long-Term Bull Market” chief global markets strategist, and Jason Hunter, technical analysis specialist, in a note on Friday.

“Overall, we expect the rally to develop further after a period of consolidation that eases the current overbought conditions,” the strategists said. “Look for weakness in 10-year bonds in the first weeks of the year to find strong support in the bond range 4.25% to 4.30%,” which is the area where they expect “significant buying pressure.”.

2023 has seen volatility for Treasuries, as the Federal Reserve has repeatedly raised interest rates to help control inflation before setting policy. On hold as price pressures ease. Markets are He is now betting on a shift to lower interest rates in March.

Profitability for 10 years ranged between 3.25% and 5.02% during 2023, with levels higher than 5%. — although it was barely seen for the first time since 2007. The ICE BofA MOVE index, which measures volatility in Treasury options, hit its highest levels since the global financial crisis 16 years ago.

Meanwhile, the Goldman Sachs team led by chief interest rate strategist Praveen Korapati said in a note on Friday that they expect 10-year bond yields to hold steady. About 4%. This is due to the rebound in growth this quarter, Further progress in reducing inflation is expected and another round of increases in the volume of Treasury auctions is expected.

“This combination of factors should, in our view, sustain Treasury yields “To 10 years it works in a relatively narrow range centered around 4%,” they said.

However, JPMorgan's technical forecasts expect yields to continue to decline throughout 2024.

Profitability for 10 years could decline In the range of 3.65% to 3.70% in the coming months and “just the opposite.” “To the lower end of March profitability of 3245% by the end of the year,” the bank's strategists said.

Read more at bloomberg.com