Bond strategists anticipate Fed rate cuts, leading to lower US Treasury yields, despite rising concerns

From Yahoo Finance: 2025-06-11 09:45:00

U.S. Treasury yields are expected to decrease as bond strategists anticipate the Federal Reserve cutting interest rates. Concerns over the rising debt pile and tariff disputes have investors worried. The market is vulnerable, especially for foreign investors, as the term premium rises ahead of Treasury bond auctions.

Global sovereign bond yields have risen over the past two months, with U.S. 10-year Treasuries seeing a 60 basis point increase in April. Despite predictions of a decline, there is a risk of yields moving higher due to deficit concerns. Economists predict two or fewer rate cuts this year, with rate futures pricing two cuts.

An ongoing auction for three-year Treasury notes has seen tepid demand. The long end of the yield curve is at risk of a supply-demand imbalance, potentially leading to higher rates. Demand for dollar-denominated assets is expected to decline this year, with Europe likely to benefit the most. European investors find Treasuries less attractive due to expensive currency hedging costs.



Read more at Yahoo Finance: Hopes for Fed rate cuts keep US Treasury yield views low ahead of supply deluge