US Treasuries at this point are exhibiting the safe haven tendency. We are pricing in expectations of the Federal Reserve that is on the move while balancing that against attractive equity market growth.

The CPI data is delayed due to the government shutdown, causing concerns over data reliability. We believe the Fed will likely ease again by 25 basis points and continue on this path. If inflation spikes unexpectedly, it could give markets pause, but one data point does not indicate a new trend.

If extreme credit stress led to recessionary tendencies, yields could go lower. Currently, lower yields reflect geopolitical tensions, trade talks approaching November 1, and effects from the government shutdown. Once these hurdles are cleared, yields could rise modestly by year-end.

Risks include credit issues, rising debt and deficits, inflation around 3%, and government uncertainty. These factors justify 10-year yields above 4% more than yields falling below 4%.