Report: Safe-haven demand expected to support U.S. Treasuries

Michael Brown, senior research strategist at Pepperstone, said in a report that U.S. Treasuries are likely to extend Tuesday's gains. Tuesday's gains were led by long-dated bonds, though they may be somewhat contained by a large number of new corporate bond issuances. "While safe-haven demand may extend these gains, if this demand continues in the coming trading days, a fresh sell-off in front-end Treasuries and a new round of curve steepening should become a reality when the market begins to reprice the Fed's outlook to a hawkish direction." He said that the current money market's expectations that the Fed will cut interest rates by 100 basis points by the end of the year are still too optimistic. (Jinshi)