Bond yields are currently likely in the process of topping out – JP Morgan

Analysts at JP Morgan highlight the recently sluggish Treasury bond performance while suggesting a pullback in the coupons as they said, “Bond yields are currently likely in the process of topping out.”

While citing the reasons, the investment bank stated that the disinflation phase has begun.

JP Morgan also mentioned that inflation will drop meaningfully lower in three to six months.

The US-based bank forecasts that core inflation will be at 5.3% YoY in the first quarter (Q1) of 2023, compared to the latest print of 6.6%.

It’s worth noting that the yields began the week on the positive side before marking a retreat as traders turn cautious ahead of the key US Wednesday’s all-important Federal Open Market Committee (FOMC) meeting and Friday’s Nonfarm Payrolls (NFP). That said, the US 10-year Treasury yields remain sidelined near 4.05% by the press time.

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