📝 Rates Volatility Likely to Remain Elevated: J.P. Morgan Strategy

Despite a soft ceiling on Treasury yields based on indications we are past peak hawkishness from the Fed and other DM central banks, it’s inadvisable to add duration as there is a risk the Fed could continue to tighten beyond February, and valuations no longer look cheap. Also, with markets transitioning away from price-insensitive sources of demand (Fed, foreign investors, US banks) to more price-sensitive buyers, volatility is likely to remain elevated.

Added tactical 10s30s flatteners; it’s 15bp too steep after adjusting for a less hawkish path for the Fed and market-based inflation expectations. - J.P. Morgan Rates Strategy