From Investing.com: 2025-01-18 06:00:00

Analysts predict US Treasury yields will fall in 2025, but the yield curve may continue to steepen. Concerns over potential Fed rate cuts have caused 10-year bond yields to reach multi-month highs. Trump’s policies, including import tariffs, could raise inflation and delay rate cuts. Recent data showed slower-than-expected consumer price growth, boosting bets on rate cuts. Treasury yields fell in response to the news.

Despite strong economic indicators, expectations for Fed rate cuts remain. The reversal in Treasury yields this week has led to a steepening of the yield curve. This “bear steepening” trend, with long-end yields rising more than short-end ones, is unusual during Fed easing cycles. The next bond moves may hinge on the reasons behind the sharp rise in long-end yields.

Analysts suggest rising Treasury term premia could be behind the spike in long-end yields. Uncertainty surrounding Trump’s policies may lead to increased volatility, affecting bond yields. While much depends on future policy developments, analysts foresee slightly lower yields by the end of 2025. They predict a 4.50% yield, slightly lower than the current level, with more pronounced declines in the front-end of the curve.



Read more at Investing.com: Is the Treasury sell-off over? Capital Economics weighs in By Investing.com