Lower US Treasury yield view persists despite biggest quarterly surge since 1994
TLT•Fixed-income strategists surveyed forecast the 10-year Treasury yield will ease to 5.00% by year-end, 4.90% in six months and 4.75% in a year, despite its biggest quarterly jump since 1994. Nearly all respondents to a separate question said the yield was more likely to exceed than fall below their near-term forecasts.
1. Yield forecasts remain lower
Median forecasts from nearly 60 strategists put the 10-year Treasury yield at 5.00% by year-end, 4.90% in six months and 4.75% in a year. The yield has risen almost 120 basis points this year and recently reached 5.34%, its highest since 2002. The two-year yield was forecast to fall to 4.70% in three months, 4.60% in six months and 4.25% in a year.
2. Forecasters see upside risk
All but two of 30 strategists who answered an additional survey question said the 10-year yield was more likely to land above their forecasts than below in the near term. Strategists have underestimated its rise in nine consecutive monthly surveys this year, with growth resilience among the factors cited. Some respondents said markets may have priced in more Federal Reserve rate hikes than policymakers will deliver, while others pointed to persistent inflation and higher term premiums as reasons yields could remain elevated.
