Adding that the dollar knee-jerk reaction "may not last"
In a note post-Fed, the firm's strategists said that the central bank was no doubt more dovish at yesterday's FOMC meeting but still 10-year Treasury yields could hit 1.75% "in a matter of weeks" and breach the 2.00% level "by mid-year".
"Chairman Powell has done nothing to talk down long-term yields. The combination of a tolerant Fed and massive Treasury supply will continue to push yields higher, in our view."
Expanding on that view, they argue that the decline in the greenback after the FOMC meeting yesterday "may not last". Adding that:
"USD has come under significant pressure in the wake of the FOMC announcement, likely thanks to the big drop in the belly of the Treasury curve. However, longer-end yields remain relatively firm, and US growth and vaccine developments continue to support at least a resilient USD in the coming weeks."
