📝10-Year Yields Post Largest Divergence To Fair Value In A Year: J.P. Morgan

Previous yield swings were likely exaggerated by poor liquidity, with market depth stuck at historically low levels and price impact rising, and also by light risk appetite ahead of this week’s auctions. The 10-year yield now displays the largest upside divergence relative to fair value in a year, likely driven by rising term premium. Treasury curve has swung from appearing significantly flat after controlling for front-end yields in late March to meaningfully steep this week. Initiate 5s20s flatterers. - J.P. Morgan