The US Department of the Treasury will be auctioning $125 billion of notes and securities this week, with Wall Street analysts gauging sentiments on the Federal Reserve’s latest rate pause through bond sector activity.
While Treasury yields (^TYX, ^TNX, ^FVX) trend higher, PIMCO Senior Bond collection of investments Manager Michael Cudzil joins Catalysts to discuss the bond sector environment, saying “these are levels that you want to start adding duration to portfolios.”
“Given the Fed’s reaction function, which all else being equal, either they’ll stay on hold for a little while longer, maybe eventually cut rates, but a hike is an extremely low probability, something they push back on several times,” Cudzil weighs in on the Fed’s monetary policy trajectory. “And so, from that standpoint, we kind of like the belly of the yield curve, the five to seven-year point of the yield curve that will be correlated and respond to the Fed lowering rates, and all else equal, gives you a little bit of cushion into higher rates if that were needed.”
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