Us bond yields have risen sharply since February, but the momentum has eased recently. After hitting a high of 1.734% in early April, 10-year Treasury yields have fluctuated and weakened, and their impact on the daily volatility of US stocks has also declined.

Investors said higher-than-expected initial jobless claims were announced on Thursday and that millions of people were out of work in spite of the strong US employment data in March, which will push yields down.

Another market rule is that the previously released higher-than-expected PPI index for March indicates that inflation is starting to rise, coupled with the steady recovery of the US economy from the COVID-19 epidemic and rising public optimism, there is still room for US bond yields to rise.

There is even a third-party view that large fluctuations will be the norm, and the era of the general trend of a single trend in US debt is over.

There is a huge divergence in the market's judgment on the direction of US bond yields in the short term.

Bull market talk

Kato, an investment manager at Mitsubishi UFJ Financial Group, said US Treasuries were attractive in part because of the Fed's commitment to easing. The Fed buys about $120 billion a month of Treasuries and mortgage bonds, suggesting that interest rates will not rise until at least the end of 2023. Kato said:

The yield on 10-year Treasuries, which exceeded 1.7% in the previous period, is likely to be the highest. Fed policy makers have repeatedly said they will stick to the current monetary policy. If the market's view of the economic outlook is close to that of the Fed, the yield on 10-year Treasuries could fall to about 1.5 per cent.

Peter Yi, head of short-term fixed income at Northern Trust Asset Management, Xiaobai Maimai Inc, head of research, said that despite the strong US employment data in March, millions still lost their jobs. He believes the Fed is seeking a broad economic recovery, in his view:

If interest rates are too high, it will have an impact on risky assets and the economy, and the Fed will take some measures to prevent this from happening.

Bear market talk

Susan Buckley, managing director of global liquidity strategy at QIC Brisbane, expects 10-year US bond yields to break through 2 per cent this year. She said:

We have seen a rapid rise in US bond yields, even much faster than expected at the end of last year. With the rapid launch of the COVID-19 vaccine and the successful control of the epidemic in the United States, the American people have more confidence, and the yield on US debt will be higher.

Ed Ardeni, founder of Aldeni research, also said the yield on 10-year Treasuries would reach 2% in the next few months and 3% or more by the end of next year. He believes that the introduction of vaccines and economic stimulus in the United States will raise US bond yields to the levels seen before the COVID-19 epidemic.

Given the extraordinary strength of the economy and rising inflationary pressures, higher yields make sense to a large extent. In the coming months, economic indicators, especially real GDP, are likely to return to pre-COVID-19 levels.

The neutral faction

Carlson, director of asset management at Ritholtz, believes that the next trend of US Treasuries will not be a single major trend of big rise or fall, but will continue to fluctuate, in part because the duration of the US bond market is close to record highs, which means that changes in yields will lead to greater price volatility and may accelerate the inflow and outflow of funds into and out of the market.