Wall Street Strategists Turn Bullish on Duration After Bond Selloff
nashnova research
The 10-year Treasury yield has climbed to roughly 5.24%, sparking a visible split among major Wall Street houses over whether now is the time to buy duration — with this week's CPI as the decisive test.
Yields at multi-year highs — what happened?
The 10-year U.S. Treasury yield sits at about 5.24%; the 2-year is around 4.8% — both at multi-year highs.
This means → bond prices have fallen sharply, hurting holders of long-dated debt. But for new buyers, the locked-in income is also the highest in years.
In plain terms = the bond market just went through a fire sale. Wall Street is now debating: is this a buying opportunity, or is there more pain ahead?
Who is calling to buy — and why?
Goldman Sachs: William Marshall's team argues long-term rates remain elevated versus fair value. Credit-market stress signals and easing technical risks support a potential 10-year Treasury rebound.
This means → Goldman sees the market as oversold — yields have overshot fundamentals and have room to fall back.
Citi favors the short end, preferring 2- to 3-year maturities. Slowing inflation and weaker wage growth make it unlikely the Fed will hike rates to 2023 peaks. Citi forecasts core CPI at 0.18% month-on-month and states that "even a 0.3% print would not be enough to justify an October hike."
What are the cautious voices worried about?
Bank of America: Mark Cabana's team sees the market's pricing of a Fed hike this month — just 19% probability — as "too low." Financial conditions are "still loose," and data could reprice expectations quickly.
This means → BofA is not denying duration's appeal, but warning that the market is underpricing hike risk — if a hike comes, long bonds would sell off further.
Barclays estimates the implied term premium — the extra return investors demand for holding long bonds over short ones — on 10-year Treasuries at roughly 1.3% to 1.5%. The team is explicit: "Compensation alone is neither protection against further yield rises nor a mechanical signal to buy duration."
Where does the neutral-rate debate point?
BMO Capital Markets: Ian Lyngen's team also considers the October hike priced "too low," yet does not expect an actual hike this month.
They endorse a deeper thesis: the neutral rate — the interest rate at which the economy neither overheats nor cools — has risen above recent-year levels, driven by structural forces such as the AI capex boom.
This reflects a market that is repricing not just "will they hike next month?" but "has the long-run anchor for rates permanently shifted higher?"
Why is this week's CPI the key?
Most strategists view this week's U.S. inflation print as the directional verdict. The consensus expects core CPI to rise 0.2% month-on-month, a deceleration from earlier readings.
BofA also flags the primary-dealer survey as an "event risk" for the long end — client feedback puts the odds of a 20- to 30-year supply cut at November's refunding at roughly 35% to 40%, with an estimated reduction of $2–3 billion per maturity.
In plain terms = if inflation is indeed cooling, the duration bulls get validated. If the data surprise to the upside, the cautious camp's warnings pay off. The referee for this Wall Street split is not on Wall Street — it is in the data.
市场有风险，内容仅供研究参考，不构成投资建议。