U.S. 10-Year Treasury Yields Expected to Rise Amid Inflation and Deficit Concerns

U.S. 10-Year Treasury Yields Expected to Rise Amid Inflation and Deficit Concerns

U.S. 10-year Treasury yields are expected to rise over the next three to six months as concerns about inflation and fiscal deficits outweigh worries over economic growth, according to strategists. Despite the recent volatility caused by trade tariffs, the macroeconomic concerns that previously weighed on the market have substantially eased.

With inflation fears resurfacing and worries about the U.S. budget deficit increasing, strategists now foresee a shift towards a more inflation- and fiscal deficit-driven environment. This shift is likely to affect U.S. Treasury yields, putting pressure on expectations for further interest rate cuts by the Federal Reserve.

The strategists predict that the 10-year Treasury yield could approach the 4.50%-4.75% range over the next few months, with a potential risk of it crossing 5%. On Monday, the 10-year Treasury yield increased by 8 basis points to 4.457%, according to Tradeweb data.

As inflation pressures and concerns about the fiscal deficit continue to grow, these factors are expected to weigh heavily on the U.S. bond market, influencing investor sentiment and expectations for future economic policy decisions.