When the Bond Market Speaks, People Listen, TD's Goldberg Says

• The long-end of the bond market is experiencing 'death by a thousand cuts' due to supply, demand, and uncertainty regarding the Fed's policy, leading to 'rock bottom' investor conviction.
• TD Securities' base case is for the Fed to hold rates, but strong economic data (e.g., 4% unemployment, 150-200k payrolls, 0.35-0.4% core PCE) could trigger a September/October hike.
• Goldberg believes that further rate hikes would help flatten the yield curve, and that 5% on the 30-year yield serves as a significant line in the sand, with real rates currently appearing attractive.

Gennadiy Goldberg of TD Securities discusses the ongoing pressure on long-end bond yields, attributing it to a combination of supply-side, demand-side, and the Federal Reserve's reaction function. He notes low investor conviction and suggests that while the Fed's base case is a hold, persistent inflation and a strong labor market could push them to hike, which he believes would help flatten the yield curve.