Stymied Bond Bears See Spark for Higher Yields in Pivotal Week


(Bloomberg) — Bond bears, long frustrated by stubbornly low Treasury yields, are girding for a make-or-break week as the Federal Reserve is expected to start laying the groundwork for reducing stimulus.

The bond market enters this potentially pivotal stretch at a crossroads: 10-year yields are testing the top of their range since early July as traders anticipate that the Federal Open Market Committee will hint in its Sept. 22 decision at a plan to curb its bond buying.

For the bearish contingent, which is the majority on Wall Street, this meeting represents one of the last prospective triggers this year for a decisive breakout in yields. Primary dealers surveyed by Bloomberg News predict on average that 10-year rates will be more than 30 basis points higher by year-end.

Fed tapering signals are hardly the only focus. Strategists also see likely ammunition for bears in the central bank’s new forecasts for its benchmark rate. An unexpected hawkish shift…

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