US 10Y TREASURY: waiting for Fed Debate over the question whether FED should further increase interest rates or not is still quite active among economists. A Nobel-prise winner and economist Christopher Pissarides is of the opinion that there is no need for the US to further increase interest rates, as noted in an interview with CNBC. Many other influential economists share his opinion. However, Fed Chair Powell previously noted that two more rate hikes should be expected till the end of this year. At the same time, CME's Fedwatch is showing investors expectations of 92% for a 25 bps rate hike at July`s FOMC meeting. Until the final decision, US Treasury yields might express higher volatility, as seen during the previous week.
10Y US Treasuries reached the level of 4% two weeks ago, still, during the previous week, yields have dropped to the short term stop at 3.8%. Lowest weekly level was at 3.76%. Volatility around 3.8% might also continue during the week ahead. At this moment on charts, there is a low probability that yields might return to 3.6%. They will rather oscillate around 3.8% or higher, waiting for the FOMC meeting as of the end of July.
