10y+ bonds are becoming even more attractive for investors
The US economy in December added the most jobs since March and the unemployment rate unexpectedly fell, capping a surprisingly strong year and supporting the case for a pause in Federal Reserve interest-rate cuts.
Nonfarm payrolls increased 256,000, exceeding all but one forecast of economists. The unemployment rate fell to 4.1%, while average hourly earnings rose 0.3% from November.
YIELDS are rising, and traders are fully pricing in the first rate cut in October. The 10-year yield may aim for the 5% level, similar to the March 2023 movement. However, let's not forget that at that time the interest rate was 5.5%, and there were no expectations for combating 9% inflation.
Currently, inflation is even below 3%, and concerns that the US will impose new sanctions or that tax cuts will create a new wave of inflation are purely speculative fears, not facts, which have created an emotional backdrop in the markets.
On the contrary, 10, 20, and 30-year bonds are becoming even more attractive for investors.
And don't forget, pre-election promises often do not turn into reality.
Nonfarm payrolls increased 256,000, exceeding all but one forecast of economists. The unemployment rate fell to 4.1%, while average hourly earnings rose 0.3% from November.
YIELDS are rising, and traders are fully pricing in the first rate cut in October. The 10-year yield may aim for the 5% level, similar to the March 2023 movement. However, let's not forget that at that time the interest rate was 5.5%, and there were no expectations for combating 9% inflation.
Currently, inflation is even below 3%, and concerns that the US will impose new sanctions or that tax cuts will create a new wave of inflation are purely speculative fears, not facts, which have created an emotional backdrop in the markets.
On the contrary, 10, 20, and 30-year bonds are becoming even more attractive for investors.
And don't forget, pre-election promises often do not turn into reality.
gor_gevorgian
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