The firm argues that the market is likely to scale back on longs in US Treasuries heading into the Jackson Hole symposium
According to the firm's senior strategist, Prashant Newnaha, there is a risk that the Fed may disappoint market expectations given that we're seeing a 25 bps rate cut for September be fully priced in and an additional 35% odds of a 50 bps reduction.
As such, the market is likely to take money out of long positions in US Treasuries ahead of Jackson Hole later in the week. Adding that talk of stimulus from Germany and ongoing remarks by Trump may also push that agenda further.
The firm also does note that with US yields still above those in nearly every other developed market, Treasuries purchases are no doubt supporting the dollar. Adding that they still view the dollar as being likely to firm further only because growth everywhere else is weak.
The final point is something that markets have gradually adjusted to over the past half-year. I mean if you're still looking for "juicy" yields at this point in time, there's nowhere else among developed markets besides the US.
