Long-End U.S. Treasurys Remain Exposed to Weakening Foreign Demand

Dow Jones
08/21

0558 GMT - U.S. Treasury yields have remained volatile in August and the long-end remains exposed to any deterioration in foreign demand, with recent yen intervention particularly in focus, SEB analysts say in a note. "The Treasury outlook over the coming months will be shaped by the Federal Reserve policy path, the inflation outlook, fiscal pressures and supply absorption, potential JPY-related intervention flows, international investor demand, and the evolution of term premia," they say. The analysts expect the 10-year Treasury yield to trade mainly within a 4.50-4.80% range over the coming months; it is last at 4.705%, up 0.8 basis point, according to Tradeweb. Weaker macroeconomic data, larger buybacks and, potentially, a more durable conflict resolution in the Middle East would support the Treasury market.

 

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