Lower US Treasury yield view reportedly persists despite biggest quarterly surge since 1994

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 rose nearly 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 and 4.25% in a year.

Strategists have underestimated the 10-year yield in nine straight monthly surveys this year, getting its direction wrong in six of the most recent months. In a subset of 30 forecasters, all but two said the yield was more likely to land above their forecasts than below in the near term. Some strategists cited expectations for less aggressive Federal Reserve rate hikes, while others pointed to persistent inflation, resilient growth and a higher term premium.

Government borrowing costs have reached multi-decade peaks in many developed economies in recent weeks amid inflation concerns and rising central bank rates. Heavy borrowing by technology companies to fund AI investment, alongside increased Treasury issuance, has added to pressure on yields.