Investing.com – US Treasury yields may decline in the near term, as economic data and Federal Reserve signals to ease market pressures align, according to analyst Adam Crisafulli.
Encouraging signs in inflation data, including falling shelter costs, and a slowdown in labor market momentum could pave the way for a rally. The December ADP jobs report showed a modest gain of 122,000 jobs, below expectations and pointing to a broader slowdown in the labor market.
The Fed is unlikely to adopt a more hawkish stance soon, with market expectations for a rate cut later this year remaining modest.
Crisafulli noted that fiscal policy remains a concern, as discussions about extending tax cuts and increasing spending could worsen the deficit. However, a more balanced narrative from Washington in the coming months may provide some relief.
“Yields will continue to be a source of pressure for stocks going forward, but Treasuries are likely to rise from current levels in the near term,” the analyst concluded.
