DeskTalk: The New Pain Threshold for US 30y Yields

Citi analysts suggest that US 30-year yields could reach 5.5% as core inflation remains high and labor markets stay tight. While current flows are dominated by shorts, a significant return of buyers is not expected until yields approach these multi-decade highs.

Key Takeaways

• 1.Market participants are eyeing 5.5% as the new round figure target for US 30y yields following the break of the 5% level.
• 2.Persistent core inflation and full employment are negative headwinds for US Treasuries and the US Dollar.
• 3.Current flow data indicates momentum-driven shorts concentrated in US 10s and 30s, though risk-reward for adding shorts at current levels is limited.

Document Preview

Page 1 of 2

Subscribe for full accessStart Free Trial