Morgan Stanley is recommending investors stick with long-term Treasurys as traders continue to pare bets on how fast the Federal Reserve can raise interest rates before Chair Janet Yellen gives her semiannual testimony to Congress this week.

With yields on U.S. 10-year notes within half a percentage point of an all-time low, Morgan Stanley strategists say there’s more room for them to fall as economic data underperform analysts’ estimates. They also recommend bullish positions in long-term bunds and gilts. The yield on the Bloomberg Global Developed Sovereign Bond Index dropped to 0.77 percent on Friday, extending its decline to the lowest level since at least the start of 2010.

“Despite the meaningful decline in sovereign yields since the Fed lifted off in December, we would rather overstay our welcome than miss a continuation of the move to lower yields,” analysts led by New York-based Matthew Hornbach, head of global interest rate strategy, wrote in a client note dated Feb. 6. “We do not think Fed Chair Yellen’s testimony will loosen financial conditions enough for global yield curves to steepen.”

Yields on 10-year Treasury notes rose three basis points, or 0.03 percentage point, to 1.86 percent as of 11:52 a.m. on Monday in Tokyo, halting a two-day decline. The price of the 2.25 percent security due in November 2025 fell 1/4, or $2.50 per $1,000 face amount, to 103 14/32.

In the best start to a year for Treasuries since the credit crisis, the 10-year yield has dropped 40 basis points as a rout in oil prices and concerns about global growth spurred an equity selloff that wiped out more than $6 trillion worldwide. The record low reached on July 25, 2012, was 1.379 percent.

Relatively Attractive

“At this moment, Treasury investors feel the yield is not at an attractive level to buy more, so that’s why their first instinct is to sell,” said Kazuaki Oh’E, head of fixed income at CIBC World Markets Japan Inc. in Tokyo. “But in a relative sense, the Treasury yield is really attractive compared to the rest of G-7, so it’s not going to rise too much.”

Ten-year Treasurys offered a 99 basis points premium over the average of its Group of Seven peers Monday. Equivalent bunds yielded 0.296 percent, while Japanese government bonds yield 0.04 percent.

Japanese investors bought a net 13.85 trillion yen ($118 billion) of long-term Treasurys last year, a record in Bank of Japan data to 2005.

Yellen is scheduled to appear before the House Financial Services Committee on Wednesday and will address the Senate Banking Committee the next day. Futures indicated 53 percent odds of a follow-up rate increase before the end of 2016. That’s down from 63 percent probability at the start of last week, and 93 percent at the beginning of the year.

Citigroup’s U.S. economic surprise index, which measures data surprises relative to market expectations, fell to minus 56 at the end of last week, the lowest level since May.