US bond markets pulled in two directions this week, with the front end rallying on soft data while the long end kept pricing fiscal risk.
Softer CPI, PPI, retail sales, and payrolls prompted much of the published research to close short-end shorts and lean bond-friendly on the 2Y, with several notes arguing the Fed is now likely on hold through September. A recurring view favored the belly of the curve and even flagged 3–4 year Treasuries as offering respectable real returns.
The long end told a different story. Multiple research pieces cited a bear steepening, with the 30Y at cycle highs and analysts pointing to rising term premium, heavy issuance, a deficit above 6% of GDP, and AI-related financing needs. One thread argued yields near 4.65–5% are fair value, with only a move above 5.5% seen as problematic. A contrarian view held that Treasury officials would ultimately cap long yields, even hinting at yield curve control.
On credit, one strand favored high-quality IG over Treasuries, citing generous spreads.