J.P.Morgan: Tempting To Add Duration But Remaining Neutral

J.P.Morgan write “10-Year Treasuries have moved from fairly valued following the FOMC meeting last week to about 40bp cheap right now, the largest divergence since early 2021, and one of the largest divergences we have observed over the last 5 years."

• "All else equal, given this divergence and that OIS forwards are pricing a more hawkish path for the Fed, it would be tempting to add duration at these levels. However, with liquidity conditions still impaired and another round of Treasury supply to digest tomorrow, we are reluctant to move off the sidelines and remain neutral on duration.”