The 10-year U.S. Treasury yield is expected to break 5%, and Citigroup has stated that a buying opportunity is coming!
Citigroup predicts that the yield on the 10-year U.S. Treasury bond is expected to break 5%, and believes this is a good buying opportunity. With economic growth, the yield has soared from 3.60% in September to 4.70%. The delay in investors' expectations for a rate cut by the Federal Reserve has driven yields higher. The options market also indicates that yields could reach 5%. Citigroup expects the benchmark yield to be around 4.75% by the end of the year. Analysts at BlackRock also believe that higher bond yields are attractive
The Zhitong Finance APP noted that Citigroup stated that with the booming economy, the yield on the 10-year U.S. Treasury bond may further rise to 5%, a level that will provide buying opportunities.
Citigroup's Chief Investment Strategist and Chief Economist Steven Wieting commented on the U.S. 10-year Treasury yield: "It is certainly possible to approach 5% this year." "We believe that a yield of 5% is indeed very attractive."
As investors prepare for inflation policies during Trump's second term as U.S. president, the yield surged from a low of 3.60% in September to around 4.70% on Tuesday. The resilience of the economy prompted traders to push back expectations for the Federal Reserve's next rate cut by a quarter of a percentage point to July, leading to a reevaluation of how high yields could actually rise.
The options market also indicates that the yield on the 10-year U.S. Treasury may soar to 5%—the highest level since October 2023. The highly anticipated non-farm payroll data will be released on Friday, and if the data exceeds expectations, it could provide another reason for Treasury traders to sell off.
Wieting does not consider a yield of 5% to be a baseline forecast. Citigroup expects the benchmark yield to be around 4.75% by the end of this year, with the federal funds rate around 3.75%.
Navin Saigal, Head of Asia-Pacific Fixed Income at BlackRock, also believes that higher U.S. bond yields are attractive.
"The rebound in yields is certainly a bit painful," Saigal said. "But to some extent, it can also be seen as a gift—there is still a lot of cash sitting idle, and now this cash can be put to use."