SAT 15 MAY, 2021-theGBJournal- The Treasury bonds secondary market closed on a bullish note, as investors cherry-picked on attractive yields at the mid and long segments of the curve.
Consequently, the average yield contracted by 8bps to 12.3%. Across the benchmark curve, the average yield declined at the mid (-8bps) and long (-14bps) segments as investors demanded the MAR-2027 (-10bps) and MAR-2050 (-24bps) bonds, respectively. However, the short end was flat.
We expect investors to resume sell-offs on Treasury bonds in the coming week, as we expect the negative sentiments in the market to persist. Thus, we maintain our view of higher bond yields in the short term.
Farther into the month, we highlight that the release of key macro indicators will shape market sentiments and the direction of yields. Such macroeconomic indicators include April 2021 CPI (Cordros Forecast: 18.75%), Q1-21 GDP (Cordros Forecast: +0.94%) and the MPC’s rate decision, which will be largely influenced by the outcome of the Q1-21 GDP number.