Benchmark US yields have soared to near 4.70% on Tuesday from a September low of 3.60%. — Bloomberg
NEW YORK: US Treasury 10-year yields can rise further to 5% as the economy hums along, a level that would offer a buying opportunity, according to Citigroup Inc’s wealth division.
“Close to five is certainly possible” this year, Steven Wieting, chief investment strategist and chief economist, said on 10-year US yields.
“Five would be something that we would think would be really appealing,” he said.
Benchmark US yields have soared to near 4.70% on Tuesday from a September low of 3.60%, as investors brace for inflationary policies under Donald Trump’s second US presidency.
The economy’s resilience has spurred traders to push back expectations on the US Federal Reserve’s (Fed) next quarter-point interest rate cut to July, prompting a rethink on just how high yields can go.
Options markets are also flashing the potential for a spike in 10-year yields to 5% – a level not seen since October 2023.
Closely-watched non-farm payrolls data due Friday may give Treasury traders another reason to sell should the data beat estimates. Citi’s Wieting doesn’t have 5% yields as a base case.
The firm sees benchmark yields ending the year around 4.75%, and the Fed funds rate at 3.75%.
Others like BlackRock Inc’s Navin Saigal also see higher US bond yields as attractive.
“The yield back up is of course a little painful,” Saigal, head of fundamental fixed income, Asia Pacific, said on Bloomberg Television. “But in some ways it could also be viewed as a gift – there’s still a lot of cash sitting on the sidelines and now this cash can now be put to work.” — Bloomberg
