Two heavyweights in the bond market are signaling now’s the time to cut back on Treasuries.

In March, Pacific Investment Management Co. reduced its holdings of government and related debt in the Total Return Fund, the world’s biggest bond fund. The $117.4 billion fund cut government debt to 21.6 percent of assets from 35.3 percent in February, according a post on Pimco’s website last week.

Morgan Stanley, one of the 22 primary dealers that underwrite the U.S. debt, predicts Treasuries will fall this year. “As growth recovers, so should inflation,” analysts at the company wrote in a report Sunday.

The benchmark 10-year yield was little changed at 1.95 percent as of 10:25 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The price of the 2 percent note maturing in February 2025 was 100 15/32.

“The economic recovery is continuing worldwide,” said Hiroki Shimazu, senior market economist at SMBC Nikko Securities Inc. in Tokyo. “There will be a rebound in inflation pressure in the second half of this year. Treasury yields are underestimating the impact.”

U.S. 10-year yields will rise to 2.40 percent by year-end, Morgan Stanley analysts New York-based Head of Global Interest- Rate Strategy Matthew Hornbach, wrote in the report.

An investor who bought today would lose about 2.3 percent if the forecast is correct, according to data compiled by Bloomberg.

The Fed is preparing to increase interest rates after keeping its benchmark close to zero for six years to help the economy recover from its worst downturn since the Great Depression. Chair Janet Yellen said in March she expects to move this year.

The danger is that investors will respond by demanding higher yields on their Treasuries, sending prices down.

Treasuries returned 1.8 percent in the first quarter and 6.2 percent last year, data compiled by Bloomberg show.