US bond rally

The Fed members’ messages, along with the search for a safe haven against increasing geopolitical risks following the Israel-Hamas conflict, also played a role in the bond rally. US bonds rallied after the Fed members’ messages, which could be perceived as a signal to stop interest rates. In Asian transactions, the 10-year bond yield lost its fastest decline since March. The 10-year yield, which fell by 18 basis points, fell to 4.62 percent. The Fed members’ messages, along with the search for a safe haven against increasing geopolitical risks following the Israel-Hamas conflict, also played a role in the bond rally. Stating that the Fed members seemed to agree on increasing bond yields and tightening financial conditions on Monday, Nomura Strategist Andrew Ticehurst said, “Market pricing suggests that the Fed will not raise interest rates this year. However, there is still a risk of an interest rate hike that can be made as ‘insurance.’” UBS, on the other hand, is taking a more cautious approach to the Fed’s statements. Giulia Specchia, the bank’s chief macro strategist, predicted that the rally in U.S. bonds could end if U.S. growth doesn’t slow. “If the macro data remains resilient, the rally may not last very long,” Specchia said. UBS expects the U.S. economy to slow significantly in 2024. If the bank’s forecast comes true, the outlook for bonds will be more positive, according to Specchia.