The 10-year U.S. Treasury yield is gradually approaching the 5% threshold, and a further selloff is a buying opportunity, Societe Generale Research’s rates strategists said in a note.
“A momentum led sell-off in the 10-year Treasury toward 5% is a buying opportunity,” they said. The 10-year U.S. Treasury yield is rising along with term premia and terminal fed funds rate expectations, they said.
Term premia is the additional yield investors demand to hold a long-dated bond rather than a short-dated one. Declining equity risk premiums and a tightening of financial conditions are likely catalysts for a reversal, they said. The 10-year U.S. Treasury yield rose about 2 basis points to 4.698%, according to Tradeweb.
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