ING forecasts that the 10-year US Treasury Yield (^TNX) could rise to 5.5% by the end of 2025, while T. Rowe says that a 6% rise is within the realm of possibility.
Lesley Falconio, head of taxable fixed income strategy at UBS Global Wealth Management, joins Catalysts to offer insights on the bond market outlook.
Falconio discusses the likelihood of 5% yields, citing strong economic data and rising inflation. "You could see 5%, you could see 5.10[%], but the question is whether or not it's sustainable, and we just don't believe that it will be," Falconio says.
"We do think over time, growth will start to slow but stay above trend, but we also believe that over time inflation is going to come down as well," she adds.
Looking ahead, Falconio notes, "What the market will be paying attention to in 2025 is the composition of that supply, meaning that whether or not they choose to take those bills that have been used to fund the deficit and lock them up. So you extend out five ... to ten years, and that composition change could have an impact on Treasury yields."
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This post was written by Josh Lynch