US Treasury yields rose sharply as higher oil prices rekindled inflation
concerns amid strong US growth, heavy debt issuance and widening fiscal strain.
Citigroup says 20-year Treasuries offer an attractive risk-reward for investors
able to tolerate further volatility. Citigroup rates strategist Jason Williams
says a Treasury put would strengthen if yields breach 5.3%, reflecting market
expectations policymakers would act to curb a rapid rise; he adds that, unless
KEVIN WARSH muddles messaging at this week’s press conference, shorts are
unlikely to drive yields above that level. Markets price a Fed rate hike this
week; Citigroup says the Fed chair need not adopt an overtly hawkish tone.
Williams also notes corporate pension and fixed-income rebalancing demand would
provide an additional layer of support once yields exceed 5.3% by allowing plans
to lock higher returns against liabilities.
