J.P.Morgan Stays Neutral on U.S. Treasury Duration, Awaits Rate Hike
Dow Jones
Yesterday
0506 GMT - J.P. Morgan expects a 25-basis-point interest-rate hike by the Federal Reserve on Wednesday, followed by another one of the same size in December, its strategists say in a note. They find the front end of the Treasury curve "valuable" but they remain neutral on duration. The front end is now at the upper end of the range and creates some optical value, but given the range of plausible outcomes at the Fed meeting, "we are not ready to add exposure yet." They also anticipate Treasurys to underperform versus German Bunds as they remain short Treasurys cross markets versus Bunds. Money markets are pricing in a 60% probability of a 25-basis-point rate hike on Wednesday, according to LSEG.
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