Bond yields dominated the week as the Fed hiked again and signaled more tightening ahead, with the 10-year pushing toward 5% — a level not seen in nearly two decades.
Most research published this week argued yields have further to run. The Fed's hike, framed as still "insufficiently restrictive," prompted analysts to pencil in at least one more increase this year and push expected easing further out. Front-end pressure was the dominant call — with several arguing the 2s10s curve should keep flattening as short rates outrun the long end. Structural bears pointed to fiscal deficits, heavy Treasury issuance, sticky oil-driven inflation, and rising mortgage rates as reasons long yields stay elevated.
But a contrarian thread pushed back. Some flagged short positioning as extremely crowded, setting up a potential "pain trade" lower in yields. Others argued the term premium has overshot fundamentals given ~2% growth and ~2.4% core inflation, calling current levels a "gift" for pension and insurance buyers — and noting 5% has historically drawn in large institutional bids.
The belly of the curve (5–7Y) was singled out as the best risk/reward.