“We think a gridlock environment for an economy poised to decelerate makes it harder now for the full term structure to keep rising,” George Goncalves, head of fixed-income strategy at Nomura Securities International, said in an emailed statement. “In the short run, this does not change the trajectory of the Fed, so curves should flatten. In the more medium term, we still believe that 10-year rates can make another move above 3.25 percent, but our conviction is lower now.”
However, as the Federal Reserve begins their two-day monetary policy meeting on Wednesday, it’s still expected that rate hikes will ensue come December. In addition, analysts can foresee benchmark yields rising above their current levels.
“I think 3.5 percent to 3.75 percent is easy and unfortunately it would be nice to say that’s because the economy is great and everything is great and nominal GDP is 5 to 6 percent and we’re getting higher interest rates,” Boockvar told CNBC’s “Futures Now” on Tuesday.
Related: 3 ETFs to Capture Post-Midterm Election Gain
For more market news, visit ETFTrends.com.