Barclays suggests buying bonds

Barclays is out with a note recommending investors buy US 10-year Treasuries.

“We recommend going long 10y US Treasuries, as we believe that longterm real rates have risen to attractive levels and the adverse reaction of the broader financial markets to the move higher in real yields suggests any further sell-off is likely to be limited in the near term,” they write in a client note.

The idea is that if yields rise further, it will trigger a further selloff in stocks. As a result, that would push yields back down. Essentially, there is a ceiling on yields.

They have an entry at 3.17% with a target at 2.95% and no stop listed.

“Even if the Fed were to hike to 3.25-3.5%, as it is currently projecting, 10y yields should not rise much further,” they write, citing low real rates in the context of soft projected growth.


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