Bullish momentum of US Treasuries will continue for a while despite the rally of stock market.

Short Comment

10year US Treasury is being transacted in yield of around 2%. The yield was higher than 3% at its peak in last year. S&P500 is in the rally too, targeting 3,000pt again. Traditional relation between Treasuries and Equities is being broken. The trend should be proceeding for a while.

The most important point in the rally of US Treasuries is the stance of central banks. Messages from Jerome Powell, Chairman of US Federal Reserve, are being interpreted as dovish messages. Brokers are expecting that the institution could lower its policy rate in this year, maybe coming July. Sluggish inflation number is supporting their expectation too. Other big central banks, European Central Bank and Bank of Japan, are more dovish than US Fed. Unlike the Fed, the central banks are still providing the liquidity to the markets in more direct way.

Another point in the rally is sluggish global macroeconomic situation. The US recorded economic growth of 3% for last quarter, which is higher than expected. The rate of unemployment in the states is 3-4%. This number is the best in the history. However, the indices in the other regions, Europe, China and other EM countries, have been not good enough.

German government cut expected economic growth for this year to 0.5%, the half of former number. The number was around 2% in last year. Several institutions are expecting that expected economic growth is around 6.2%. India, Brazil, and Russia had recorded lower economic growth than expected for first quarter, this year.

The uncertainty will be proceeding in the global macro for a while. Even though the macro in the US is the best right now, the concern from economists has the enough background. Of course, it would be another supporting point for safe assets like US Treasuries.

I believe S&P500 could touch 3,200pt in this year, but yield of 10year US T-Note has target of 1.5%. The US Treasuries will be supported in Fundamental and Technical points, both.