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0930 GMT – U.S. data on Tuesday prompted a fall in Treasury yields across the curve on Tuesday and there is room for more declines as the Federal Reserve continues to cut interest rates, UBS analysts say in a note. They forecast the 10-year Treasury yield to decline to 3.75% by June 2026, implying the potential for capital gains. With the Treasury relying more on short-term bills, any sharp rise in Treasury yields should be limited, according to UBS. “This creates an appealing risk-reward for quality bonds, which offer durable income in our base case, and have the potential to perform well in the event of slowing economic activity.” The 10-year Treasury yield falls 1.1 basis points to 4.013%, according to Tradeweb.([email protected])
Gilt Yields Risk Rising if OBR Projections Look Too Optimistic
0913 GMT – U.K. government bonds, or gilts are vulnerable as investors await the U.K. economic projections by the Office for Budget Responsibility during the budget statement, deVere Group CEO Nigel Green says in a note. The OBR is an independent organisation that gives U.K. economic forecasts which are used in the preparation of the budget. However, there are concerns that the OBR’s estimates could be overly optimistic. “If traders decide the projections lean too far toward optimistic revenue expectations or an ambitious GDP path, the premium demanded on gilts will rise,” he says. Ten-year gilt yields are last up 2 basis points at 4.510%, Tradeweb data show. ([email protected])
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