US Rates Quarter-Final Games

HSBC recommends buying 30Y TIPS, arguing that current long-dated real yields offer attractive valuation and that the US Treasury curve has already priced in a hawkish Fed policy path.

Key Takeaways

• 1.Treasury yields are re-testing year-to-date highs driven by geopolitical risks and rising oil prices.
• 2.Forward markets price in a quarter-point rate hike by October, reflecting a weighted average of potential scenarios.
• 3.The firm recommends buying 30Y TIPS due to attractive valuations in long-dated real yields.

Table of Contents

• Hike versus hold
• Fed path versus term premium
• Nominal versus real yields
• Risk versus reward
• Disclosure appendix

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