Investors continue buying bonds

Investors continue to believe that bonds will appreciate in 2024. Despite the sell-off following Friday’s strong nonfarm payrolls data, investors continue to believe that bonds will appreciate in 2024 and see the recent declines as a chance to take advantage of higher yields before the Fed starts cutting rates. The sell-off that came with the employment data stopped after investors started buying after the yield on the 10-year U.S. Treasury bond rose to 4.1%, the highest level since mid-December. Despite the recent rise, yields are still below their October peaks, with expectations that the Fed will start cutting rates as early as March. “Any yield level between 4% and 4.2% is a buying opportunity for me in the 10-year U.S. Treasury bond. For the 4.2% level to break above, either the rate hikes have to come back or the rate cuts have to be taken off the table,” said Priya Misra, a portfolio manager at JPMorgan Asset Management. Strategists at TD Securities also told clients that bonds could fall further in the near term, but they believe the labor market is cooling and the 10-year U.S. Treasury yield will finish 2024 at 3%. “Over the course of the year, we could see the 10-year U.S. Treasury yield fall below 3.5%,” said Gene Tannuzzo of Columbia Threadneedle Investments.