Salient to Investors:

Aaron Kohli at BNP Paribas said it’s the calm before the storm for the Treasury market, so the bloodletting could continue a little bit longer if the Fed disappoints at the next meeting.

Ian Lyngen at CRT Capital said the market is refining Fed policy expectations and investors are curtailing expectations for the Fed to be more aggressive tapering.

Justin Lederer at Cantor Fitzgerald said the market could have overreacted to tapering, and this brings us back to solid ground.

The yield gap between 10-yr TIPS and comparable nominal US debt touched 2 percent last week, the least since January 2012.

Foreign holdings of Treasuries fell in April by the most since June 2006.

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