The bond market is digging in for a long period of low interest rates, and just how low they go could be up to President Donald Trump.
For context, the 10-year yield was at 2.55% at the beginning of May, and at the beginning of the year, many strategists believed the Fed would be raising interest rates this year, and the 10-year would be above 3%. Yields move opposite price, and the 10-year yield is broadly watched because it is associated with lending rates, particularly home mortgages.
"1.85/1.90 to me is within the realm of reasonableness. There's no magic numbers here. It's really a question of if you downgrade growth, downgrade inflation expectations, your Fed expectations and risk premia. All of that is pointed down for high quality fixed income, so prices are going up," he said.
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