US Treasury and German Bund yields on track to revisit cyclical highs

06:37 GMT – Bond yields are expected to return to new cycle highs, with yields on the 10-year US Treasury and German Bund close to 5% and 3% respectively, Societe Generale Research strategists say in a note. “This is remarkable, especially in the current geopolitical situation,” they say, adding that the fundamentals are strong, but longer-term forces are likely at play. With quantitative tightening in force, the large supply of The obligations to be absorbed add to a rapid reconstruction of the term premium, estimate the strategists. Supply, rather than demand, appears to pose a greater danger for U.S. Treasuries, while demand could be more complicated in Europe, they say. The yield on the 10-year Bund is trading down 1.5 basis points at 2.921%, that on the 10-year US Treasury is at 4.951%, according to Tradeweb. (emese.bartha@wsj.com)

U.S. Treasury yields could fall faster if market accelerates Fed rate cut

06:18 GMT – Long-term euro zone government bond yields appear to have “very limited” room to fall in 2024 as the European Central Bank should be able to slowly cut rates, says strategist Jussi Hiljanen rate at SEB Research, in a note. . “If our expectations that the ECB would cut key rates to just 2.50% by the end of 2025 materialize, the fall in German long yields from their currently low levels appears relatively minor,” he says. The potential for U.S. Treasury yields to fall clearly appears greater once the Federal Reserve begins cutting rates, he says. (emese.bartha@wsj.com)