Treasury Yields Seen Lower Despite Fed Rate Hike Bets
US Treasury yields are expected to decline over the coming year, according to bond strategists polled by Reuters. Despite a sustained selloff in Treasuries since the US-Iran war began in late February, which has pushed the benchmark yield up nearly 80 basis points, these strategists still believe yields will fall.
The ten-year yield was forecast to drop to 4.50% within three months and hold that level at end-January before drifting lower to 4.34% in a year, according to survey medians. Interest rate sensitive two-year yields were expected to drop more sharply.
Financial markets have priced out Fed rate cuts entirely and are betting on at least one hike this year, with several Fed policymakers echoing the need for higher interest rates. However, fixed income strategists in the August 6-11 Reuters survey held on to their long-standing view that Treasury yields will fall.