Morgan Stanley: A further rebound in U.S. bonds requires a significant increase in interest rate cut expectations

Morgan Stanley's research strategists stated that unless the market significantly increases its expectations for a Federal Reserve rate cut, it is unlikely that U.S. Treasury bonds will rebound further. They said in their report: "A further rebound in the bond market may require a dovish shift." They estimate that if the market's forecast of the Fed funds rate bottom drops from around 3.65% to 3.25%, the yield on 10-year U.S. Treasury bonds could fall below 4.00%.