HALISTER1: Sell Treasury 10-Year Notes at 2.1% Levels, Says MUFJ-MS

Sell Treasury 10-Year Notes at 2.1% Levels, Says MUFJ-MS

(Bloomberg) -- At 2.1% levels, Treasury 10-year notes are a sell, says Kenta Inoue, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.
  • Once the North Korea-driven risk-off moves subside, investor focus will shift back to Fed’s plan to shrink its balance sheet, Tokyo-based Inoue says by phone
  • Ten-year yields will then rebound to 2.3% levels, where investors can build long positions
  • Over the long term, slowing inflation expectations will weigh on yields as U.S. consumer prices struggle to rise
  • Once U.S. monetary policy normalization comes to an end, long positions on Treasuries will deliver capital and carry gains
  • Likelihood of a military conflict between U.S. and North Korea is “quite low”
  • North Korea can never be Trump’s main issue because his administration priorities employment generation and a military clash would widen a U.S. fiscal deficit
  • NOTE: Ten-year yield adds 2bps to 2.24% Tuesday
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Kenta Inoue (Mitsubishi UFJ Morgan Stanley Securities Co Ltd)

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