Capital Economics: US Treasury rally expected to lose momentum

According to a report by Capital Economics, Thomas Mathews, Head of Asia Pacific Markets, stated that the rally in US Treasuries, which had previously driven yields lower, is expected to lose momentum, while German Bunds may see further gains.

He noted that US Treasuries face several key tests this week. Mathews pointed out that one of the main reasons for the Federal Reserve to cut interest rates is to protect the health of the labor market. "But recent labor market momentum has increased, and we expect the upcoming US June employment report, due later this week, to show strong results once again," Mathews said. It is becoming increasingly clear that labor market conditions will not serve as a reason to delay tightening policy. "This is perhaps the biggest near-term risk for US Treasuries, but it is not the only one." (Jin Shi)