Big Week for Bonds Ahead

January 29, 2018

Big Week for Bonds Ahead Photo

This week will be interesting for fixed income investors. With mounting talk of a bear market ahead for U.S. Treasuries, the market has to digest several key events this week. To begin, President Trump will address the country on Tuesday with the State of the Union, where he will highlight infrastructure spending on top of the stimulus from the tax cuts last year. Outgoing Federal Reserve (Fed) Chair Janet Yellen heads her last Fed meeting before Jerome Powell takes the helm. I expect the Fed will strengthen its view on the economy and set expectations for an interest rate increase at the March meeting. To top off a busy week, the January employment report will be released on Friday. I expect job growth, unemployment rate and average hourly earnings to support a tight labor market. All three of these events have the potential to push yields higher. I would not be surprised to see the 10-year Treasury yield at 3% by the end of the first quarter.

Tags: Monday Morning O'Malley | Federal Reserve | 10-Year Treasury | Unemployment rate | Labor market | Federal Reserve chair

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