J.P.Morgan Remain Neutral On Duration

J.P.Morgan have noted that “with nominal yields at their highest levels in 9 months, and valuations modestly cheap, one could argue it’s a compelling location to add duration. However, we are reticent do so now, as event risk looms large. We forecast nonfarm payrolls rose 175k in July (consensus: 200k), with the unemployment rate falling to 3.5% (consensus: 3.5%): a slower pace of job growth would be supportive of lower yields, but with the unemployment rate expected to decline further, this could be an offset. Moreover, liquidity is set to deteriorate, August is the second weakest month for Treasury market liquidity after December. Against this backdrop, we stay neutral on duration.”