Barclays are bearish US government bonds, citing multiple reasons to expect lower prices, higher yield, ahead:
- recent rally is over stretched: "The rally over the last few weeks seems excessive and we recommend shorting 10y US Treasuries"
- says bullishness on the US 10yr is "odd" given the barrage of strong economic data that suggests rates will remain higher for longer: "While the Fed still seems to be sticking to its baseline of cuts starting this year, the case for a meaningful easing cycle has weakened in our view raising the risk of the Fed forecasting a shallower easing cycle."
- adds that the few softer data points are misleading, analysts at Barclays say the risks are skewed toward the economy surprising to the upside
- increase in supply of US Treasuries, the Federal Reserve trying to offload its government bond portfolio also suggest higher yields to come
