Investing.com — US Treasury yields could decline in the near term as economic data and Federal Reserve signals align to ease market pressures, according to analyst Adam Crisafulli.

Encouraging signs of inflation data, including cooling housing costs, and slowing momentum in the labor market could pave the way for a rally. The ADP jobs report for December showed a slight gain of 122,000 jobs, missing forecasts and signaling a broader labor market cooldown.

The Federal Reserve is unlikely to adopt a more hawkish stance anytime soon, with market expectations for rate cuts later this year remaining modest.

Fiscal policy remains a concern, Crisafulli said, as discussions on extending tax cuts and increasing spending could weaken the deficit. However, a more balanced narrative from Washington in the coming months may provide some relief.

“Yields will remain a source of equity pressure going forward, but Treasuries are likely to rally from current levels in the near term,” the analyst concluded.