(Bloomberg) — Bank of America strategists expect the prospect of fewer interest-rate cuts this year to weaken the demand for longer-duration, investment-grade bonds.
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US Treasuries have sold off just a few days into 2025, with the 10-year rate jumping to 4.76% after a strong jobs report on Friday — up seven basis points from the day before. The 30-year rate, meanwhile, briefly topped 5%. Yields remained higher as of 12:48 p.m. on Monday.
That has made longer-term notes riskier to hold, which could push investors toward bonds with shorter maturities, strategists including Yuri Seliger wrote in a note dated Friday.
Corporate-bond funds may be in for a wave of outflows if Treasury yields continue to climb after highly anticipated inflation data later this week, according to a separate note from JPMorgan on Monday.
Investors will be watching closely the consumer price index and producer price index readings this week, as well as policy changes following President-elect Donald Trump’s inauguration next week.
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