Capital Economics: US Treasury rally expected to lose momentum

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Golden Finance reported that on June 29, Thomas Mathews of Capital Economics said in a report that the uptrend in U.S. Treasuries—which has pushed yields lower—is expected to lose momentum, while German Treasuries could rise further. The Asia-Pacific regional market head said that U.S. Treasuries face some key tests this week. He said that when the Federal Reserve is still considering a rate cut, one of the key arguments for cutting rates is to protect the health of the labor market. “But recently, labor market momentum has strengthened, and we expect another strong (June) employment report to be released later this week,” Mathews said. It is becoming increasingly clear that the labor market will not be a reason to postpone tightening, “which may be the biggest short-term risk for U.S. Treasuries, but not the only risk,” he said.
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