Wall Street Week Ahead: Bond investors look for Fed to justify steepening yield curve

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Expectations that the global economy has dodged the worst-case coronavirus pandemic scenarios have led to a dramatic sell-off in U.S. government bonds from their record highs, pushing the yield curve to its steepest level since March.

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NEW YORK (Reuters) – Expectations that the global economy has dodged the worst-case coronavirus pandemic scenarios have led to a dramatic sell-off in U.S. government bonds from their record highs, pushing the yield curve to its steepest level since March.

FILE PHOTO: Pedestrians walk past the New York Stock Exchange as the building opens for the first time since March while the outbreak of the coronavirus disease (COVID19) continues in the Manhattan borough of New York, U.S., May 26, 2020. REUTERS/Lucas Jackson

“We can now discredit the worst outcomes of the virus. The sentiment around the risks around the virus have really changed,” he said, pointing to declining infection and fatality rates in coronavirus hot spots such as the New York City region.

As a result, he is moving into corporate debt and mortgage-backed securities and shying away from Treasuries, which he said have “no investment value” at their current yields.

“At the end of the day, we have a ton of stimulus, both fiscal and monetary, and the markets have reacted to it,” he said.

Reporting by David Randall; Editing by Bernadette Baum and Richard Chang


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Expectations that the global economy has dodged the worst-case coronavirus pandemic scenarios have led to a dramatic sell-off in U.S. government bonds from their record highs, pushing the yield curve to its steepest level since March.

Source: {authorlink}

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