It's time to sell US Treasurys after an 'excessive' bond-market rally, Barclays says

• It's time to sell the the 10-year US bond after an "excessive" bond rally, Barclays said.
• Fueled by rate cut bets, investors have been snapping up the 10-year Treasury in the past few weeks.
• But a resilient US economy means the case for a "meaningful easing cycle" has weakened.

It's time to sell the benchmark US government bond.

That's according to strategists at Barclays, who say the recent rally in the bond market has probably gone too far.

Staying bullish on rate cuts, investors have been snapping up US bonds in the past few weeks. Yields on the 10-year note have dropped 30 basis points, down from this year's high of 4.35%. The 10-year yield is currently at 4.096%.

"The rally over the last few weeks seems excessive and we recommend shorting 10y US Treasuries," analysts led by Anshul Pradhan and Amrut Nashikkar wrote in a note on Friday.

In fact, the analysts said it's "odd" that investors have been bullish on bonds given the slew of strong economic data supporting rates remaining higher for longer. From GDP to inflation to jobs, multiple readings have surpassed estimates, hinting that the US economy is still too bubbly for the Fed's liking.

"While the Fed still seems to be sticking to its baseline of cuts starting this year, the case for a meaningful easing cycle has weakened in our view raising the risk of the Fed forecasting a shallower easing cycle."

And Barclays is indeed betting on a resilient US economy. Analysts say they think the soft data points are misleading, and that risks are skewed toward the economy surprising to the upside.

That, along with an increase in supply of US Treasurys and a Fed that's trying to shed its portfolio of long-term government bonds, means yields on the 10-year note are likely to rise from here, analysts said.

Investors have been seesawing between ramping up and dialing back wagers on rate cuts this year. Last week jobs report for February contained a mixed bag of data for investors trying to map the path of Fed policy. The number of jobs added to the economy beat expectations, a sign that things are still hot, but unemployment rose after revisions to the prior months' data and wage growth tapered.