The US Treasury market is poised for potential gains in longer-dated securities, driven by expectations of lower-than-expected payroll data. This scenario could trigger increased buying activity, particularly in the long end of the curve, as investors anticipate yields remaining below the 5% threshold. The market's current short positioning, influenced by a resilient economy, hawkish Federal Reserve stance, and fiscal deficit concerns, heightens the likelihood of a short-squeeze if these narratives are challenged. Softer labor market indicators, including a rising U6 unemployment rate and uneven job reports, bolster the case for more than one rate cut this year, further enhancing demand for longer-dated Treasuries.
The iShares 20+ Year Treasury Bond ETF (TLT), which focuses on tracking the performance of long-term US Treasury bonds, is currently priced at $85.85 as of 07:31 on January 10. This marks a slight decline from its last close of $86.03, hovering near its 52-week low of $85.34. Investors are closely monitoring labor market data releases, which could significantly impact the ETF's performance in the coming days.