Citi Research highlights a significant rise in 10-year Treasury yields, which have surged to 4.75%, the highest level since the October 2023 LDI crisis. This increase is attributed to robust jobs and growth data, suggesting a potential pause in the Federal Reserve's rate cut cycle. "Treasury yields have resumed their march higher as the persistently strong jobs and growth data points to a pause in the rate cut cycle," Citi analysts note. The report warns that higher yields could deter banks from purchasing mortgages until rates stabilize, potentially leading to a "buyers strike." Additionally, the elevated yields may reverse the recent strong inflows into fixed-income funds, as these funds might be compelled to sell mortgages to meet redemptions. As the market navigates these dynamics, Citi advises caution, particularly in the mortgage-backed securities sector, where increased TBA supply and delta hedging flows are anticipated.