US Treasury Yields Expected to Gradually Decline Over the Next Year

On October 7, a Reuters survey showed that fixed-income strategists expect US Treasury yields to decline in the coming months. Despite the benchmark 10-year Treasury yield recording its largest quarterly increase since 1994, strategists remain bearish on yields. Market confidence in a decline in yields has weakened, with some strategists believing that financial markets have overestimated the Federal Reserve's rate hike expectations, and the actual rate hike may be lower than anticipated. Additionally, inflation concerns stemming from the US-Israel conflict with Iran and rising policy rates from major global central banks have caused government financing costs in several developed economies to reach their highest levels in decades. Tech giants are heavily borrowing for AI infrastructure development, leading to an increase in US Treasury issuance, which further exacerbates yield pressure. The Reuters survey of nearly 60 strategists indicates a median expectation that the 10-year Treasury yield will drop to 5.00% by the end of the year, 4.90% in six months, and 4.75% in one year.

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