Poll-Lower US 10-year Treasury yield view on thin ice, several see 5% first

"Over the medium and longer-term the fundamentals argue for lower yields. That's mainly because we think the inflation picture is going to get better," Michael Chang, head of rates derivatives at Citi, said. "We do have a bullish bias overall," Chang added, "but ... it's a bit hard to have a very constructive view in the near-term unless we get a resolution in the war and a pullback in the oil price." Not everyone thinks inflation is about to fall. "Even if the war were to stop tomorrow and oil goes back towards $70, it doesn't change some of the inflationary factors we're seeing from AI and growth," said Kelley Gerrity, managing director and portfolio manager at Morgan Stanley Investment Management. In an April 2025 interview, Bessent said a 10-year yield of 5% would be "an uncomfortable area for the economy, for Treasury, for issuing bonds." Only two forecasters expected the 10-year yield to be trading at 5.0% in three months. If the yield hits that level, it would be only the second time since 2007. That was before the global financial crisis and the Federal Reserve's aggressive policy response then compressed yields to abnormally low levels because the central bank bought swathes of the market through its quantitative easing programs. A slim majority of strategists, 17 of 31, said it was likely the 10-year yield will hit the politically-sensitive 5% mark at some point in the next three months. "None of the bigger parties have any kind of real plans on how to deal with the rising government debts," Nordea chief analyst Jan von Gerich said, among a few in the survey forecasting 10-year Treasury yields well above 5% in coming months. Others said Treasury's decision to introduce surprise into a traditionally predictable debt management schedule is also putting upward pressure on yields. "There is a lot of broader concern Treasury violates its regular and predictable debt management strategy here to help bring longer term rates down," Meghan Swiber, director of U.S. rates strategy at Bank of America, said. "And if they do, they'll have to pay the price in terms of investors needing to build in higher compensation to lend to a government that is not regular and predictable." (Reporting by Sarupya Ganguly; Additional reporting by Indradip Ghosh; Polling by Anant Chandak; Editing by Ross Finley and Andrew Heavens) BENGALURU, Sept. 10 (Reuters) - The U.S. 10-year Treasury yield will fall over the coming year, according to a majority of fixed income strategists surveyed by Reuters, though the conviction behind those calls is fraying with a subset viewing a near-term yield spike to 5% as likely. Unprecedented government borrowing has pushed bond yields across the world to near multi-decade highs in recent weeks on worries about inflation and rising interest rates. Benchmark U.S. 10-year yields hit a three-year high of 4.86% on September 9 driven by renewed escalation in the Iran war and Treasury Secretary Scott Bessent's failure to get yields down with his $6 billion Treasury buyback. US10YT=RR The war has driven oil prices over $100 a barrel - about 40% higher than pre-war levels. Interest rate futures are pricing nearly two Fed rate hikes by end-March. A narrowing majority of economists in a separate Reuters poll, however, predicted rates will stay put, even though the Federal Reserve has missed its 2% inflation target for over five years. Still, bond strategists in the September 8-10 Reuters survey, mostly from banks and institutions that sell bonds, clung to forecasts for declining yields. While the 10-year yield was predicted to fall 20 basis points to 4.67% in three months, hold that level in six months and ease to 4.55% in a year, the rate-sensitive 2-year yield, currently 4.44%, was forecast at 4.20%, 4.12% and 4.00% in three-, six- and 12-months respectively. US2YT=RR

Poll-Lower US 10-year Treasury yield view on thin ice, several see 5% first

Several forecasters see 5% on the 10-year

Treasury borrowing strategy adds to upward pressure

Reuters poll sees lower 10-year yields over the year

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