Citigroup: Maintaining the view that the U.S. Treasury yield curve will steepen

The Citigroup research strategist stated in the report that following the disappointment in the US nonfarm payroll data last Friday, their core view on US Treasury bonds remains unchanged. They expect the yield curve between 5-year and 30-year bonds to steepen further, and that the Federal Reserve will implement lower rates in 2026 and 2027. They pointed out that the risk of the 5/30-year bond yield curve steepening is that if the 30-year bond yield rises above 5% in a large-scale sell-off, it may attract demand back. The strategists believe that the market is still underestimating the risk of 5-year bonds driving a significant steepening of the 5/30-year yield curve.