📝 Market Variables Don't Give A Convincing Picture Of A Top In Yields: Citi G10 Rates Strategy

Market variables don’t give a convincing picture of a top in yields yet, even though we are fundamentally constructive on the long end of the market. These include a loss of upward momentum in inflation breakevens, an outperformance of 10s on the yield curve (such as a 5s10s30s butterfly); a move lower in the cyclicals to defensives performance ratio in equities and a move lower in crude oil. Inflation breakevens are still heading higher. 10s have outperformed on the curve recently although not in any overwhelming sense, and has underperformed in the last couple of sessions. Crude oil initially appeared to have peaked after the move lower from $130, but it has been staying above $100, as the geopolitical conflict has stayed supportive for energy prices. Cyclical to defensives seemed to have peaked. - Citi G10 Rates Strategy