During the previous week the US Treasury yields were under influence of both debt-ceiling ongoing negotiations without an actual deal, and posted PCE data. As officially released data on PCE shows higher than expected monthly output of 0.4%, it heated expectations of market participants that the Fed will most probably continue with further rate increases of 25 bps in June`s meeting. Reaction of the market was an increase of Treasury yields, where 10Y bond yields increased from 3.6% up to 3.8%.
Insecurity is still high on the market, so it might be expected that bond yields will stay elevated during the following period of time. At this moment, there is no indication on charts that yields might go higher, reaching 4%, so at this moment there is a sort of peak at level of 3.8%. Still, if the Fed continues to increase interest rates, a 4% might easily become a target of 10Y bonds. For the week ahead the most important to watch is potential debt-negotiation deal, as the US might enter into default as soon as June 5th, as per Treasury Secretary Yellen. Hopefully, this will not be the end scenario. If deal is accomplished, the yields might revert a bit to the downside, probably to the level of 3.6%.
Insecurity is still high on the market, so it might be expected that bond yields will stay elevated during the following period of time. At this moment, there is no indication on charts that yields might go higher, reaching 4%, so at this moment there is a sort of peak at level of 3.8%. Still, if the Fed continues to increase interest rates, a 4% might easily become a target of 10Y bonds. For the week ahead the most important to watch is potential debt-negotiation deal, as the US might enter into default as soon as June 5th, as per Treasury Secretary Yellen. Hopefully, this will not be the end scenario. If deal is accomplished, the yields might revert a bit to the downside, probably to the level of 3.6%.
