US 10-year yields: New range highs with limited relief – Societe Generale
Societe Generale’s Kenneth Broux describes a difficult week for global bonds as rising Oil prices deter duration buying. US Treasuries and Bunds have repeatedly broken into higher yield ranges, with next US 10-year projections at 5.24% and 5.36% and Bund at 3.70%/3.74%.
In a challenging week for global bonds, rising oil prices have impeded duration buying, according to Societe Generale’s Kenneth Broux. The US 10-year yield projections are at 5.24% and 5.36%, while the Bund yield is at 3.70% to 3.74%. A relief may come from month and quarter-end rebalancing, as well as upcoming US PCE and Eurozone CPI data.
Over the past month, yields in Treasuries and Bunds have surged, breaching into three fresh trading ranges and achieving new cycle highs. Despite these levels being technically stretched, there's no immediate urgency to purchase debt at discounted prices until the pattern changes. Investors will remain vigilant in the coming days due to the release of inflation data from both the US and the euro zone.
Any potential relief might rely on month and quarter-end portfolio rebalancing, extending benchmark duration.
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