Analyst Benjamin Cowen predicts that the 10-year Treasury yield will peak before mid-November. This forecast follows a record high of 5.342% reached on October 1, which marked the highest level since early 2002. Cowen suggests that the yield could potentially climb further to a range between 5.4% and 5.6%.
The analyst bases his timing on historical patterns observed during midterm election years in 2018 and 2022, when yields peaked between early October and mid-November before declining. He anticipates that market fear will reach its highest point around the Federal Reserve meeting scheduled for October 28.
Market expectations for an interest rate hike in October have shifted significantly, with the probability dropping from 64% to 17.7% within a single week. Cowen notes that bond traders are concerned about the Federal Reserve potentially tightening monetary policy too slowly, despite signs of a soft labor market.
The September jobs report indicated the creation of only 29 000 new positions. Following this data, Bitcoin experienced a price increase, while short sellers faced losses totaling approximately $27.5 million within one hour. Cowen expects long-term rates to rise over the next 10 to 20 years, which may continue to impact non-yielding assets.
