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Treasuries Rally to Cool With China Stimulus Seen, BNP Says

  • Yields could drop to 2016 low before rising to 1.95%: Ladha
  • Healthy U.S. growth, inflation will limit scope for decline
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The virus-induced rally in U.S. Treasuries could be brief as China stimulus and a recovery in U.S. growth rein in demand, according to BNP Paribas SA.

Yields for the 10-year bond may drop to a 2016 low before rising as high as 1.95% in the next three months, said Shahid Ladha, head of G-10 rates strategy at BNP. While the coronavirus outbreak will hurt China’s economy, the rapid gains in Treasuries suggest that the market has gotten ahead of itself, he said.