FXStreet reports that according to Lisa Shalett, Chief Investment Officer, Wealth Management at Morgan Stanley, treasury yields have fallen recently, but investors concerned about slowing economic growth may be overlooking other key factors at play in government bond markets.
“Treasuries have become disconnected from fundamental market conditions due to extreme technical factors that are keeping rates low. These include: Central-bank bond-buying. Slower issuance. Non-US bond-buying. Pension-fund rebalancing.”
“Investors should watch for 10-year nominal Treasury rates to rebound toward 1.75% in this third quarter. Rather than chase tech stocks higher, we urge investors to focus on stock-picking, emphasizing earning fundamentals and free cash flow. The financial sector, in particular, stands out as a quality and value-oriented hedge against rising rates.”
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