HSBC said that as the actual yield on 30-year US bonds approaches a 25-year high, current valuations are attractive, and there are limited catalysts to further increase the term premium. The bank's interest rate strategist Dhiraj Narula wrote in the July 24 client report that in the short term, although hawkish arguments may prevail at the July FOMC meeting and after, the current level is sufficient to support closing the existing Pay 2Y1Y SOFR trading strategy at 4.13% to achieve a profit of +23 basis points.

HSBC said that as the actual yield on 30-year US bonds approaches a 25-year high, current valuations are attractive, and there are limited catalysts to further increase the term premium. The bank's interest rate strategist Dhiraj Narula wrote in the July 24 client report that in the short term, although hawkish arguments may prevail at the July FOMC meeting and after, the current level is sufficient to support closing the existing Pay 2Y1Y SOFR trading strategy at 4.13% to achieve a profit of +23 basis points.