Treasury Bulls Should Keep Calm and Carry On: HSBC's Major
- Balance-sheet math defies ‘what goes up must come down’ camp
- Yields may be rising, but bank’s forecasts remain the same
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Famed Treasury bull Steven Major is sticking to his guns: The selloff in 10-year notes has run out of steam as the Federal Reserve’s bid to downsize its $4.5 trillion balance sheet looks unlikely to send yields soaring in the world’s largest bond market.
“Investors want to believe yields will go up as there are signs that the QE policy has had its day,” Major, global head of fixed-income research at HSBC Holdings Plc, wrote in a report Wednesday, referring to quantitative easing. “But we think the stabilizing ballast of central bank balance sheets will contain yields with the normalization of Fed policy likely to be very gradual.”