An increase in the Fed's overnight rate to 4.75 percent may cool the housing market and slow growth. Treasuries' yield curve may flatten.
Better times for Treasuries are coming soon and a 5 percent yield is a good time to buy. The selling has been excessive. Once you have a bad economic number, like a slowing housing market, people will start buying back.
Yields on Treasuries, especially shorter-maturity debt, will have a bias to rise in the next one or two months.
We don't see the Fed as being too hawkish as inflation is under control. The bearish trend may be put on hold for a while.
Economic activity is very strong this quarter and the Fed will have to raise rates to keep inflation under control. The market sentiment is still on the bearish side.
It is a contained number and we don't have to worry about inflation. With the Fed expected to raise rates again, it becomes even less of a concern.
As long as the yuan controls remain, China will have to keep on buying U.S. dollar assets. It's nothing to be too worried about.