We’ve seen near a 20-basis point backup in long #bond #rates since the beginning of the month, which has come alongside many #economic data prints that have surprised to the upside, as well as firmer than expected #inflation.
One question to consider, then, is how much of this #economic improvement is due to restocking dynamics versus more permanent/structural gains to #economic activity? The answer to that is likely to become more apparent in the months ahead.
We foresee a gradually rising range for long-end #yields in the year’s second half, as @USTreasury issuance will remain robust.
In fact, the 30-Year #UST may well re-test the 1.7% level later in the year, providing #fiscal support eventually materializes and #Covid #vaccine developments unfold as expected.
Still, there are limits, and we think there is relatively low odds of the 30-Year long #bond #yield breaching 2.0%, as we expect the @federalreserve would tweak QE guidance at such valuations, and the tremendous demand for #income would likely reassert itself by that point.
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