Tags: treasuries | bonds

Experts: Treasury Yields Headed Higher

By    |   Tuesday, 29 Jun 2010 09:42 AM

The recent Treasury bond rally that has sent the 10-year Treasury yield to a 10-month low of 3.03 percent is almost over, many experts say.

Without a continuing financial crisis, yields have nowhere to go but up.

The average forecast of strategists polled by Bloomberg calls for a 10-year yield of 3.74 percent by year-end.

Treasuries represent “our least-favored segment of the bond market,” Citi Global Wealth Management strategists wrote in their June report.

“We expect to see higher yields once investor risk aversion recedes, causing this sector of the bond market to underperform.”

A year ago, there was strong concern that the financial crisis would continue, and Europe’s debt woes revived those fears earlier this year. So investors flocked to Treasuries.

But now the attitude is changing.

“No one’s freaking out,” Jason Brady, a managing director at Thornburg Investment Management, told Bloomberg.

“As we’ve gotten to lower yields in Treasuries, they’ve gotten less interesting.”

To be sure, not everyone is bearish on Treasuries. Kevin Giddis, a managing director at Morgan Keegan, points out that financial dangers haven’t disappeared.

“Today’s risks are less threatening in severity (than 2008), but greater in number,” he told The Wall Street Journal.

“(The worry list) is long enough to justify today’s yield levels and perhaps levels that are even lower.”

Giddis predicts the 10-year yield will drop to 2.75 percent by the end of the third quarter, a level not seen since April 2009.

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The recent Treasury bond rally that has sent the 10-year Treasury yield to a 10-month low of 3.03 percent is almost over, many experts say. Without a continuing financial crisis, yields have nowhere to go but up. The average forecast of strategists polled by Bloomberg...
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2010-42-29
Tuesday, 29 Jun 2010 09:42 AM
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