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Treasury Bonds: Weak demand subdues market as average yields closed week up by 6bps to 12.3%

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SAT 12 JUNE, 2021-theGBJournal- Bearish sentiments returned to the bonds market as investors’ demand weakened following sustained expectations of higher yields. Specifically, average yields expanded by 6bps to 12.3%.

Across the benchmark curve, average yield expanded at the short (+4bps), mid (+10bps) and long (+1bp) segments following sell-offs of the JAN-2026 (+24bps), NOV-2029 (+20bps) and JUL-2045 (+30bps) bonds, respectively.

In the coming week, we expect the release of the May 2021 CPI (Cordros Forecast: 18.01%) to shape market sentiments and the direction of yields.

In the longer term, we maintain our expectations for higher yields, as institutional investors’ preference for higher-yielding short to mid-term instruments persists.

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