HALISTER1: BNP Paribas Raises Buy Target for UST 10Y to 1.75%-1.85%

BNP Paribas Raises Buy Target for UST 10Y to 1.75%-1.85%

(Bloomberg) -- Wait to initiate new longs given current market direction driven by technicals and lack of evidence of overbought conditions, BNP strategists say in client note.
  • Stronger domestic data and updated Fed expectations adds to case for higher yields
  • Previously considered re-initiating long 10Y at ~1.60%
    • Current market pricing of ~25% probability of a 25bp Sept. hike compares with 60% in late May when 10Y yields were trading 1.75%-1.85%
  • See a rate hike as early as Sept., with a “small chance” of a Dec. rate hike as well
    • Data to decide timing; rate hike process would start with more upbeat FOMC statement and subsequent hawkish minutes and speeches noting diminished risks
  • NOTE: On July 16, BNP revised 10Y target to 1.40% from 1.60%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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