Being too optimistic may not be a good thing, and the outlook for U.S. Treasury yields may be "stormy" ......
Foreign media surveys of bond strategists show thatStrategists believe that US Treasury yields will slip in the coming year, suggesting that the market has almost completely priced in the Fed's expectation of a rate cut next year.
Since October last year it reached 5Since the 02% peak, the benchmark US 10-year Treasury yield has been sharply** due to increased safe-haven demand following the outbreak of the war between Israel and Hamas.
Subsequently, growing optimism that inflation will fall further, coupled with dovish comments from the Federal Reserve** strengthened expectations of an earlier rate cut, led to yields reaching further to 4 last weekA three-month low of 10%.
In the latest U.S. labor market report, the unemployment rate unexpectedly fell to 3After 7%, this benchmark yield rises to 419%，And a reminder that the economy of the world's largest economy remains resilient and there is no urgent need for interest rate cuts.
According to a survey of 50 bond strategists conducted by foreign media from December 7 to 12They believe that this "recovery" in US Treasury yields will continue。They are expected toBy the end of February next year, the yield on the 10-year Treasury note will only reach 425%, but may remain volatile during this period.
By the end of May, strategists expect the yield on the 10-year Treasury note to fall to 410%, which will reach 3 after 12 months88%, down from 4. in the November survey**30% and 400%, but much higher than the survey conducted earlier this year.
A smaller sample of U.S. primary dealers who deal directly with the Fed in the foreign media also came to roughly similar results. Zhiwei Ren, portfolio manager at Penn Mutual Asset Management, said
"At the beginning of November, the market was expecting a rate cut of around 70 basis points next year, compared to 120 basis points now. What we've seen lately** is largely based on these expectations being too far in advance. ”Another survey of analysts conducted by foreign media last week showed thatThe Fed will keep interest rates unchanged until at least July next yearand then cut rates by 100 basis points in the second half of next year, which would also be later than the market currently expects.
Of the 31 respondents who answered an additional question,:Twenty-three said the risk of the 10-year Treasury yield appearing in the next 3 months is high or very high.
This is a significant shift from the previous surveyIn previous surveys, more than 70% of respondents mistakenly said that the 10-year Treasury yield had peaked for three months in a row.
The dot plot released after this week's two-day FOMC policy meeting and what Powell said at the press conference will determine the path of yields in the coming months.
The survey found that strategists believe that increasing expectations of rate cuts will also push the yield, which is sensitive to interest rates, by about 40 basis points to 4.4 in six months30%, followed by a further 50bps decline to 380%。
If this is achieved by analysts, the inversion between the so-called recession indicator - the US 2-year and 10-year Treasury yields - will normalize by the end of November next year.
Thomas Simons, senior economist at Jefferies, is one of the few who expects a recession to begin in the first quarter of 2024, despite the blowout growth in the U.S. economy in the latest quarter. He said
"Given the low-cost financing of households and businesses, as well as the massive fiscal stimulus, we ultimately found that both were less affected than expected. ”