United States rates: Yields seen contained, steepeners favoured – TD Securities

TD Securities analysts assert that the Federal Reserve's 25 basis point rate increase and hawkish outlook have bolstered the US inflation-fighting reputation, rendering both nominal and real US rates appealing. They see minimal potential for growth in 10-year yields due to the market's already hawkish pricing and worries about growth, arguing that a flattening of the curve presents opportunities to enter steepeners in the months ahead.

Although yields might rise briefly in the immediate future, the analysts maintain that nominal and real rates remain attractive. The re-flattening curve also offers investors an advantageous entry point for steepeners, which should continue to be the most favorable option in the coming months.