The continued persistence of 10-year Treasury notes to remain below 3% reminds us of an important message: don't mess with the Fed

The continued persistence of 10-year Treasury notes to remain below 3% reminds us of an important message: don't mess with the Fed. At 2.7% today, 10-years are trading comfortably in the 2.6% to 2.8% range they've been in since January. In the meantime, big banks and money managers are presumably underwater on their bearish bonds bets as the consensus estimate for 10-year yields is 3.4% by year end. The alleged rate increase is due to an improving US economy. However, what the banks and hedge funds have failed to recognize is slow growth in new jobs and the various hot spots of geopolitical risk. The Fed has basically stated it will not raise rates until it sees marked improvement in the job market. Meanwhile, overseas demand for US bonds is strengthening, with the Ukraine/Russia conflict acting as the leading catalyst.