Reuters survey: Long-term U.S. Treasury yields are expected to remain high due to inflation and debt pressures weakening interest rate cut expectations.

On October 15, a Reuters survey of 75 bond strategists showed that short-term U.S. Treasury yields are expected to decline due to anticipation of Fed rate cuts, while long-term yields are expected to remain resilient, considering persistent inflation, rising deficits, and concerns about Fed independence. The median estimate from the survey indicates that the benchmark U.S. 10-year Treasury yield is currently around 4.0%, fluctuating around 4.10% in three and six months, and expected to rise to 4.17% in one year. The continuous rise in long-term yields could further worsen the rapidly deteriorating fiscal situation of Washington authorities. Many analysts stated that with economic growth remaining strong and inflation rates far exceeding the Fed's 2% target, the policy cannot be characterized as highly restrictive, and does not justify the current expectations reflected in the interest rate futures market of five rate cuts between now and 2026. They warned that prematurely and excessively loosening policy as the labor market begins to show signs of fatigue could reignite inflationary pressures, driving yields sharply higher. (Jin10)