Barclays on US Treasuries, say that despite the selloff already that have pushed 10- and 30-year yields to their highest levels since 2007 and 2011 "yields are not stretched".

Higher rates are being driven by:

  • data showing a resilient U.S. economy
  • Atlanta Fed's GDPNow forecasting model projecting real gross domestic product growth that could come in at 5.8% for Q3
  • the minutes last week from the FOMC's most recent meeting revealed the possibility of more interest rate hikes to come
  • higher real (inflation-adjusted) yields

Barclays point out "building stress" in the options market indicating that "investors are getting worried about a large further selloff"

And question if the Fed is done:

  • "An economy growng above trend, potentially even accelerating, despite the tightening of policy, calls into question whether monetary policy is even tight"
us 10 year Treasury yields rising 21 August 2023

10 year Treasury yields