0647 GMT – Markets are dismissing the European Central Bank’s “high for longer” narrative and are pushing government bond yields lower, Jussi Hiljanen, chief strategist for USD and EUR rates at SEB Research, says in a note. In this context, he considers German long-end government bond yields as “extremely low.” A further decline in German bond yields would represent undershooting to levels that SEB Research thinks aren’t sustainable relative to their longer-term policy rate prospects. “Similarly to the U.S., we think current levels are near the bottom of the predicted trading range for the coming weeks,” Hiljanen says. ([email protected])

US Treasury Yields Seen Volatile in Coming Weeks

0643 GMT – U.S. Treasury yields are expected to hover in a wide range in volatile trade in the coming weeks, possibly rebounding higher as the recent decline seems stretched, SEB Research says. Long-dated Treasury yields might well have peaked but the further downside seems limited until new data triggers or softer signals by the Federal Reserve, Jussi Hiljanen, chief strategist for USD and EUR rates, says in a note. Going into 2024, Hiljanen expects U.S. rates markets to step up their expectations of rate cuts by the Federal Reserve, causing both short- and long-end bond yields to ease and the U.S. Treasury curve to steepen, he says. ([email protected])