Fed Reluctance May Push Yields to Lows, Misra Says: Tom Keene

Yields on benchmark 10-year Treasury notes may drop as low as 1.25 percent if the Federal Reserve is slow to provide more stimulus as the U.S. economy weakens, according to Bank of America Corp.’s Priya Misra.

“Markets are obsessed with QE3 right now. They expect QE3 the next bad data print. Everyone expects the Fed to jump in. What if the Fed wants to wait?” Misra, head of U.S. rates strategy at Bank of America Merrill Lynch, said on Bloomberg Television’s “Surveillance” in an interview with Tom Keene. “If we continue to get weak data and the Fed doesn’t jump in right away, that is when markets panic.”