According to Jinshi Data, Dowding, chief investment officer of Royal Bank of Canada BlueBay Asset Management, said that there is a high risk of continued increase in fiscal spending after the US election, so there is limited room for the upside of two- to 10-year Treasury bonds.
Dowding noted that given that 2- to 10-year Treasury bonds yield about 3.5%, there may be limited room for significant upside in these bonds unless there is a substantial recession.
He also said the Federal Reserve's aggressive 50 basis point rate cut this week could limit the prospects for further rate cuts, thereby limiting further declines in yields.
BlueBay expects the spread between two-year and 30-year Treasury yields to widen, leading to a steeper yield curve.