Policy Uncertainty, Inflation Risks to Continue to Weigh on Long-End Treasurys

Dow Jones
07/31

0520 GMT - Despite three dissents, the Federal Reserve's decision on Wednesday to remain on hold reinforces Societe Generale strategists' view that policy uncertainty and inflation risks will continue to weigh on the long end of the curve, they say in a note. "While investors push out the timing of future hikes, higher real yields and firmer inflation expectations suggest markets are increasingly questioning the Fed's willingness to act," the strategists say. Regarding view on positioning, the strategists have moved from a flattening bias to a neutral curve stance and favor inflation breakevens as a hedge against rising inflation risk premia, they say.

 

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