Maybank: Supply Pressures and Safe-Haven Buying in a Tug-of-War as US Treasuries Seek a New Equilibrium

Deep News14:15

Maybank said that US Treasury investors are searching for an "equilibrium" yield level as concerns over Treasury supply and inflation intensify while demand for safe-haven assets simultaneously rises.

"US Treasuries appear to be searching for a new equilibrium point after two consecutive weeks of bull steepening," said Winson Phoon, the bank's head of fixed income. "The risks are no longer one-sided, with Treasury supply and inflation concerns increasingly being offset by AI-related credit risks and hedging demand."

This week's Federal Open Market Committee meeting may "not stir up too much of a wave."

"The more critical question is whether the recent AI-related pressures are merely a short-term fluctuation or mark the beginning of a broader deterioration."

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