Thomas Mathews Expects U.S. Treasury Rally to Lose Momentum as German Bunds May Rise Further

Capital Economics Asia-Pacific markets head Thomas Mathews said in a report that the U.S. Treasury rally that previously pushed yields lower is expected to lose momentum, while German government bonds may rise further. According to Odaily, Mathews said U.S. Treasuries face several key tests this week. He noted that one of the Federal Reserve’s key reasons for cutting interest rates is to protect labor market health, but recent labor market momentum has strengthened. Mathews said he expects the U.S. June jobs report, due later this week, to be strong again. Mathews added that it is becoming increasingly clear that labor market conditions will not be a reason to delay tightening policy, which he said may be the biggest near-term risk for U.S. Treasuries, though not the only risk.