A rather striking prophecy came from Mohit Kumar, chief European economist of the famous investment bank Jefferies. Kumar advised investors who started to form long positions at 2.50 percent in 10-year German bonds and 3.75% in US 10-year Treasury bonds, to maintain their positions throughout the summer months.
Arguing that if there is an agreement on the borrowing ceiling in the USA, a small upward movement in interest rates is expected, but this will be short-lived, Kumar predicted that a downward path will be opened for interest rates throughout the summer.
Kumar argued that valuations for long-term positions will start to become more attractive as of the second half of June, depending on whether central banks come to the end of their rate hike paths or come very close.
Bond yields soaring in Europe as well
Messages from ECB President Lagarde and Bundesbank Bank Nagel that interest rate hikes will continue increase the yields on government bonds of Eurozone member countries.
The yield on Germany’s 10-year bond hit 2.5 percent for the first time since April 24. Currently, it is at 2,491 percent, an increase of 3 basis points compared to yesterday.
Yield on Italy’s 10-year bond rose 4 basis points to 4.356 percent for the first time since April 28.
The yield on Germany’s 5-year bond increased by 3.6 basis points to 2,481 percent, and the 2-year bond increased by 3.6 basis points to 2.883 percent.
Interesting prophecy: Those who keep these will receive their reward soon