is transient and with a liquidity supernova descending upon the markets, this will push short-term rates down leaving fixed-income investors chasing long-term (duration) bonds. The Fed itself will likely introduce some type of Twist style program expanding purchases of duration bonds. Add in the upcoming SLR exemption expiration and the historical long-term trend in the decline in the US10Y and the case for lower rates becomes very sexy.
Yellen is going to be dumping $1.1T into money markets.
SLR exclusion exemption may not be extended. Democrats are demanding higher banking restrictions. No SLR extension creates a bottleneck for O/N repos and warehousing.
There is also a strong technical case as it is oversold and we’ve had a very reversal candle. This looks primed to explode any day now. Additionally, the US10Y looks overbought with the classic .
Minerd believes rates US10Y will hit -.5% by 2022. While I think that is a little on the extreme end of the range, I do believe 1.15% to 1.25% in the near term is realistic with .5%.