Deutsche Bank Advises Shorting 10-Year Treasury as Economic Growth Signals Pressure Bond Prices

Deutsche Bank strategists, led by Francis Yared, recommend shorting the 10-year Treasury note, targeting a yield of 4.45% with a stop at 3.9%. The current yield stands at 4.087%, reflecting an inverse price relationship. This outlook follows the Fed's latest Survey of Senior Loan Officers (SLOOS), which revealed heightened bank willingness to extend consumer loans—reaching a 2022 high—and the first uptick in mortgage demand since 2021.

The SLOOS data suggests steady U.S. growth at or slightly below potential, a scenario that historically undermines bond performance. As investors pivot toward riskier assets in stable economic conditions, Treasury prices face downward pressure. "The signal aligns with our top-down assessment," noted the team, emphasizing reduced safe-haven demand for fixed income.