JPMorgan Predicts Rebound for U.S. Debt, Goes Against Goldman Sachs
In a surprising turn of events, JPMorgan Chase strategists have made bold predictions regarding the future of U.S. Treasury bonds, directly contradicting the stance of financial giant Goldman Sachs.
According to JPMorgan’s chief global market strategist Marko Kolanovic and technical strategist Jason Hunter, the current “rest” in the U.S. debt market will give way to a resumption of the bull market. They anticipate a fall in the 10-year U.S. Treasury yield from its current level of about 4%, followed by a rise and subsequent fall in the “budding secular bull market”.
The strategists expressed their expectation for further gains after a period of consolidation that would ease the current overbought conditions. They predict that the 10-year Treasury note will weaken in the first few weeks of the year, finding solid support at 4.25-4.30%, with significant buying pressure in that area.
This optimism from JPMorgan comes at a time when U.S. Treasuries are expected to be volatile amid the Federal Reserve’s repeated interest rate hikes to curb inflation. However, markets are now betting that the Fed will switch to rate cuts as early as March.
On the other hand, Goldman Sachs chief interest rate strategist Praveen Korapaty and his team released a report on Friday predicting that the 10-year U.S. Treasury yield will hover around 4% in light of a rebound in economic growth and further progress in lowering inflation.
Despite this, JPMorgan remains steadfast in its prediction, with strategists foreseeing yields to continue falling in 2024. They believe that the 10-year Treasury yield could fall back to a range of 3.65% to 3.70% in the coming months and could fully fall back to last March’s low of 3.245% before the end of the year.
It seems that the future of U.S. debt remains uncertain as financial heavyweights take opposing stances on the matter. As we move forward, the market will be closely watching to see which prediction holds true for U.S. Treasury bonds.