Morgan Stanley: Investors should not hesitate to buy if Treasury yields rise this week

The U.S. Treasury market has historically had a poor performance this week. Morgan Stanleystrategists said if this year's situation repeats itself, investors should "not hesitate" to buy on dips.
October was the worst month for the U.S. Treasury market on average in the past 25 years, with a median decline of 0.30%, mainly concentrated in the first half of the month. Especially in the week before Columbus Day, U.S. bond yields usually rise. This year's Columbus Day falls next Monday, October 13.
Morgan Stanley believes this seasonal trend is partly related to the usual auctions of 10-year and 30-year Treasury bonds. This year's two auctions are scheduled to be held on October 8 and 9 and will not be postponed due to the U.S. government shutdown. In addition, the bank said that entering the fourth quarter, traders 'balance sheets freed up room to build short positions.
Morgan Stanley's interest rate strategy team Matthew Hornbach, Martin Tobias and Shaun Zhou said that if this happens again this year, investors should move in time. The main reason is that although the government shutdown has delayed the release of official data, information from unofficial sources shows that the U.S. labor market is weakening.
"As the next week's Treasury issuance comes, if Treasury yields continue to rise, we advise investors to increase their holdings of long-term U.S. debt," the strategist wrote in an October 3 report."Although government labor market data has not been released yet, other sources continue to suggest market weakness."
From the perspective of U.S. Treasury bond auctions, the situation in October this year is consistent with past experience. From October 7 to 9, the U.S. government plans to issue a total of US$119 billion in 3-year, 10-year and 30-year treasury bonds.