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Infrastructure Capital Advisors is optimistic about US 10-year Treasury bonds, citing expectations that the Federal Reserve will only raise interest rates one more time. The CEO and portfolio manager of the firm noted in a report that a single additional rate hike aligns with the Fed’s “dot plot” (the policymakers’ rate projections) and is fewer than current market pricing suggests. He added, “The yield on the US 10-year Treasury bond typically runs about 100 basis points higher than the Fed funds rate’s terminal value. Therefore, we expect that with weak housing data and sluggish core CPI figures prompting the Fed to pause rate hikes, the yield on US 10-year Treasuries will stabilize around 5%.”

1. This month, French government bonds experienced a sell-off that spread to the broader eurozone market, attracting large investors to scoop up heavily hit assets, including Italian bonds and corporate bonds. Investors are betting that concerns about the risk of contagion in the market may be exaggerated. 2. The financing cost premium for 10-year French government bonds over 10-year German government bonds has widened to 1.4 percentage points, an increase of about two-thirds since the beginning of the month. As worries about the potential consequences of a French debt crisis intensify, the spreads of other eurozone bonds have also widened, with Italian government bond spreads rising above 1.1 percentage points. 3. Several large asset management institutions have said they have decisively bought bond assets affected by the sell-off, arguing that it is unlikely that the eurozone will repeat the economic collapse seen during the debt crisis more than a decade ago. Institutions such as abrdn believe, “This is not a repeat of the situation in the early 2010s.”

1. According to the Financial Times, this month's French government bond sell-off has spread to the broader eurozone market, prompting major investors to buy heavily hit assets, including Italian bonds and corporate bonds. 2. Several large asset management institutions have stated that they have decisively bought bonds affected by the sell-off, reasoning that it is unlikely the eurozone will see an economic collapse similar to the eurozone debt crisis over a decade ago, and that market concerns over the “contagion effect” may be exaggerated.

Market sources: Isomorphic Labs, a subsidiary of Alphabet, is in fundraising talks at a valuation of at least 40 billions.