Bonds

financial markets

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Market dislocation may subside further, but Treasuries not out of the woods

We think the bond market dislocation that caused the recent surge in long-dated Treasury yields will continue to ease. Nonetheless, we think investors are overestimating how far the Fed will cut this year; if we’re right then it could limit how much more relief Treasuries get. We also think sovereign bond yields in other DMs will end 2025 near or above their current levels. Meanwhile, we doubt a further stabilisation in markets will be enough for the spreads of riskier bonds like corporate or EM dollar bonds to keep their still-low levels.

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