Continue to favour 3-year treasuries, long 30-yr real rates and 2s10s flattener trades. We also see rising odds of Fed overdelivering followed by rate cuts as terminal rate pricing moves beyond 4.0%. Long-end real rates are at levels where it should slow economic activity. See the 2s10s curve inversion reaching 60bps as long-end Treasuries are seen as a hedge for tightening financial conditions.
- TD Securities Rates Strategy
Comments