Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Economy

What a soft landing would mean for the US Treasury market

admin by admin
October 19, 2024
in Economy
0
What a soft landing would mean for the US Treasury market
0
SHARES
5
VIEWS
Share on FacebookShare on Twitter

Investing.com — A soft landing for the U.S. economy could have serious implications for the Treasury market, as per analysts at BCA Research. 

In the note, the analysts say that with recent positive economic data pushing the 10-year Treasury yield into what they define as the “Soft Landing Zone,” investors may see stabilization in yields even as the economy avoids recession.

The “Soft Landing Zone” refers to a trading range between 3.80% and 4.83% for the 10-year yield. 

This range captures scenarios where inflation trends toward the Federal Reserve’s 2% target, and unemployment stays near its current levels, reflecting neither overheating nor severe economic contraction. 

As BCA’s analysts note, in such a scenario, the Fed’s easing of monetary policy would continue, but without a full-blown recession requiring aggressive cuts.

Looking ahead over the next year, BCA forecasts that Treasury yields will gradually decline if the economy follows the Fed’s projections.

 Specifically, the 2-year Treasury yield could fall to 3.33%, the 5-year to 3.52%, and the 10-year to 3.84%, with the 30-year settling around 4.27%. 

These projections assume moderate easing by the Fed, with the federal funds rate drifting down to 3.625% by the end of the period.

A soft landing would provide some relief to bondholders by reducing the upward pressure on yields, which had climbed amid inflation concerns and uncertainty about the Fed’s trajectory. 

This scenario offers a favorable environment for bond investors, especially those maintaining positions with longer duration. 

As per BCA, positioning portfolios above the benchmark duration and holding steepener trades (such as the 2-year/10-year Treasury curve) could be advantageous in anticipation of a soft-landing outcome.

However, the note underscores that risks remain. If the Fed adopts a hawkish approach even in a soft-landing environment—perhaps by pausing rate cuts after an initial easing—the upper end of the yield curve could remain elevated. 

In that case, the 10-year yield might touch 4.63%, and the 30-year yield could reach 4.96%, near the boundaries of what BCA refers to as the “Inflation Scare Zone.”

The analysts stress on the importance of being prepared for different outcomes. 

While they assign a low probability to an inflation resurgence, they warn that any sign of persistent inflation could push yields higher. 

Similarly, if the labor market weakens more than expected, Treasury yields might fall into the “Recession Scare Zone,” where deeper Fed cuts would be necessary.

This post appeared first on investing.com

Previous Post

China boosts export controls on dual use items, state media says

Next Post

What defines a growth stock? Bernstein weighs in

admin

admin

Next Post
What defines a growth stock? Bernstein weighs in

What defines a growth stock? Bernstein weighs in

Trending News

Trump trolls Trudeau, calling him ‘governor’ of the ‘state’ of Canada

Trump trolls Trudeau, calling him ‘governor’ of the ‘state’ of Canada

December 10, 2024
Long CF: bullish breakout imminent as stock holds strong support near $75 in upward channel

Long CF: bullish breakout imminent as stock holds strong support near $75 in upward channel

March 21, 2025
ECB cuts interest rates by 25 bps, as expected

ECB cuts interest rates by 25 bps, as expected

December 12, 2024
Subscribe to Insightful Word


    Recent News

    Asian markets close mixed amid lingering trade tensions; Nikkei hits 6-month high

    Asian markets close mixed amid lingering trade tensions; Nikkei hits 6-month high

    June 27, 2025
    Nike shares jump on improved outlook, shift from China; analysts see recovery

    Nike shares jump on improved outlook, shift from China; analysts see recovery

    June 27, 2025
    Dow Futures soar as Wall Street bulls charge toward record highs

    Dow Futures soar as Wall Street bulls charge toward record highs

    June 27, 2025
    Morningstar lifts Netflix target but warns shares remain overvalued

    Morningstar lifts Netflix target but warns shares remain overvalued

    June 27, 2025

    Recent News

    Asian markets close mixed amid lingering trade tensions; Nikkei hits 6-month high

    Asian markets close mixed amid lingering trade tensions; Nikkei hits 6-month high

    June 27, 2025
    Nike shares jump on improved outlook, shift from China; analysts see recovery

    Nike shares jump on improved outlook, shift from China; analysts see recovery

    June 27, 2025

    Latest News

    • Asian markets close mixed amid lingering trade tensions; Nikkei hits 6-month high
    • Nike shares jump on improved outlook, shift from China; analysts see recovery
    • Dow Futures soar as Wall Street bulls charge toward record highs

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.