Daishin Securities "US TB Bottom 2.70%... 10-Year Korean Treasury Bond at 3.10%"

[Asia Economy Reporter Hwang Yoon-joo] Daishin Securities on the 22nd presented the lower target levels of the 10-year U.S. Treasury Bond (TB) and the 10-year Korean Treasury Bond yields as 2.70% and 3.10%, respectively, for around one month ahead.

Gong Dong-rak, a researcher at Daishin Securities, stated, "After a decline of about 20 to 30 basis points from the peak levels by country, the bond market is expected to enter a phase of exploring the lower bound of the interest rate range for the time being."

Researcher Gong forecasted, "The Federal Reserve's stance confirmed after the May FOMC appears generally firm," adding, "It is highly likely that the rate hike cycle will continue until the end of this year."

He also pointed out, "The strong and persistent rate hikes and indications of possible future hikes simultaneously leave room for changes in fundamental conditions that may arise from the rate increases."

According to the Bloomberg consensus reflecting the financial market's outlook on the U.S. economy, since May, inflation expectations have slightly increased, whereas growth expectations have fallen significantly to the 2% range. While vigilance regarding inflation continues, concerns about growth falling below that level are being detected.

Researcher Gong diagnosed, "The economic outlook for G20 countries, including the U.S., is not much different," noting, "There is a clear movement where the consensus on growth is matching or even overwhelming changes in inflation expectations."

He said, "Naturally, the bond market, which is sensitive to macro conditions and outlook changes, has gradually shifted its focus from inflation to the economy," evaluating, "Monetary authorities responded strongly to higher-than-expected inflation, and as a result, the bond market was exposed to considerable price volatility risk."

He added, "Paradoxically, strong tightening has internalized monetary policy issues, previously considered exogenous variables, as factors that can contract the economy, forming a dynamic of potential economic slowdown due to strong tightening."

This content was produced with the assistance of AI translation services.