Don’t Become Bullish on Treasuries Now, Credit Agricole Says

Investors shouldn’t turn positive on U.S. Treasuries following recent gains sparked by weaker-than-expected economic data, according to Luca Jellinek at Credit Agricole Corporate & Investment Bank.

Treasuries rose yesterday by the most in almost two months after a report showed U.S. private employers added fewer jobs than forecast in May. The rally marked a reversal from last week, when 10-year yields climbed to a 14-month high as investors weighed whether the U.S. economy is strong enough to lead the Federal Reserve to curtail its bond purchases.

“It is difficult to get too bullish on rates markets on the back of a tidy correction in yields,” Jellinek, who is based in London and is the head of European interest-rate strategy, wrote in a note to clients today. “Fixed-income investors are likely to remain obsessed with the Fed ‘taper.’”

The U.S. 10-year yield was little changed at 2.09 percent today at 1:24 p.m. Tokyo time, according to Bloomberg Bond Trader prices.

The yield fell six basis points yesterday, the biggest decline since April 12. It was 2.23 percent on May 29, the highest since April 2012.

Companies in the U.S. added 135,000 workers in May, figures from the Roseland, New Jersey-based ADP showed yesterday. The median forecast of 40 economists surveyed by Bloomberg called for an increase of 165,000.

To contact the reporter on this story: Kenneth Foo in Singapore at kfoo23@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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