Allianz Investment: The surge in U.S. Treasury yields may reflect investors' concerns about a recession in the U.S. economy
Recently, the surge in U.S. Treasury yields has attracted attention. On April 9, the yield on the 10-year U.S. Treasury soared to 4.5%, subsequently stabilizing around 4.4%, but still significantly higher compared to less than 3.9% previously. Allianz Investment stated that the price movements of U.S. Treasuries may reflect investors' concerns that a sharp slowdown (or recession) in U.S. economic growth could further worsen an already unsustainable U.S. fiscal outlook. On the other hand, we may see institutional investors rebalancing or leveraged funds deleveraging. In the short term, the sell-off in bonds could exert enough pressure on the Trump administration to force the U.S. to abandon its current tariff stance. If this does not happen, further market volatility may prompt the Federal Reserve to intervene by providing liquidity support or cutting interest rates. In the current environment, Allianz Investment believes that a steepening yield curve investment is the best deployment for portfolios, as the institution expects investors to demand a higher risk premium for long-term bonds
According to Zhitong Finance APP, the recent surge in U.S. Treasury yields has drawn attention. On April 9, the yield on the 10-year U.S. Treasury soared to 4.5%, and then stabilized around 4.4%, but still represents a significant increase compared to less than 3.9% previously. Allianz Investment stated that the price movements of U.S. Treasuries may reflect investors' concerns that a sharp slowdown (or recession) in U.S. economic growth would further deteriorate an already unsustainable U.S. fiscal outlook. On the other hand, we may see institutional investors rebalancing or leveraged funds deleveraging.
In the short term, the sell-off in bonds may exert enough pressure on the Trump administration to force the U.S. to abandon its current tariff stance. If this does not happen, further market volatility may prompt the Federal Reserve to intervene by providing liquidity support or cutting interest rates. In the current environment, Allianz Investment believes that a steepening yield curve investment is the best deployment for portfolios, as the institution expects investors to demand a higher risk premium for long-term bonds