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JPMorgan repeated its assertion Monday that U.S. 10-year Treasury yield (US10Y) has peaked after reaching a level of around 4.2% last year. The firm’s global market strategy team sees a drift lower by the end of the trading year.
“We continue to believe that US 10-year bond yield has peaked at 4.2%, a call we made last October,” the financial institution stated. JPMorgan added: “Our FI team has 3.5% end year target.”
Early in Monday’s trading, the 10-year yield was lower by 1 basis point, sitting at 3.96% after it popped back above the 4.00% level on Friday. Moreover, the 10-year also hovers above both its 100-day and 200-day moving averages. See below a year-to-date performance chart of the 10-year:
“We believe that yields are more likely to move lower in 2H from current levels, rather than higher. There is further evidence that we are moving into a disinflation phase,” JPMorgan noted. “In addition, there is a potential for a policy mistake, keeping the yield curve strongly inverted, and a risk of a rollover in consumer spending and labor markets, each of which could bring yields down in 2H of this year.”
For investors following Treasury yields, they may also look to examine related exchange traded funds that have their price action heavily tied to bond yield swings. See below a grouping of funds:
- iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT)
- iShares 10-20 Year Treasury Bond ETF (NYSEARCA:TLH)
- iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF)
- iShares 3-7 Year Treasury Bond ETF (IEI)
- iShares 1-3 Year Treasury Bond ETF (SHY)
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