Analysts at Ned Davis Research said in a note Tuesday that they were downgrading the U.S. from 58% overweight to 54% market weight and repositioning elsewhere.
The firm noted that last week's flight to safe trade briefly contributed to the outperformance of U.S. Treasuries. However, they feel that fundamentals and technicals continue to weigh against U.S. debt relative to other countries.
“The U.S. economy remains strong, inflation is sticky, and the Fed continues to postpone the timing of its rate cuts,” state analysts said.
They further note that “the mild overweight of the US market in the global allocation was inconsistent with our neutral view on US duration. Furthermore, the global fixed income allocation model This indicates that the allocation to Europe may increase in the next update.
Additionally, the investment research firm highlighted that the spread between US 10-year Treasuries and 10-year Treasuries exceeded 200bp for the first time since October, rising to 219bp, the highest since November 2019.
“This widening of spreads was not only noticeable for European yields; the spread with Canada reached its highest level since at least 1989, when daily statistics began,” said Ned Davis. To tell. “On a relative currency-hedged basis, the US has fallen against Europe and is testing its 2019 record low. The US continues to trend lower against Japan and is struggling against the UK.”
