Investing.com — U.S. Treasury yields could fall in the short term as economic data and signals from the Federal Reserve align to ease market pressures, according to analyst Adam Crisafulli.
Encouraging signs in inflation data, including cooling shelter costs, and slowing momentum in the labor market could pave the way for growth. December’s ADP jobs report showed a modest gain of 122,000 jobs, below forecasts and signaling a broader cooling in the labor market.
The Federal Reserve is unlikely to adopt a more hawkish stance anytime soon, with market expectations for a rate cut later this year remaining modest.
Fiscal policy remains a concern, Crisafulli noted, as debate over extending tax cuts and spending increases could weigh on the deficit. However, a more balanced narrative from Washington in the coming months could provide some relief.
“Yields will remain a source of pressure on stocks going forward, but it is likely that government bonds could recover from current levels in the short term,” the analyst concluded.
