Reuters Survey: US Long-Term Treasury Yields Expected to Stabilize Before Rising This Year; Massive Debt Issuance May Make Fed Balance Sheet Reduction "Unfeasible"

According to Odaily, a Reuters survey shows that long-term US Treasury yields will remain stable in the short term, but are expected to trend higher later this year due to concerns over inflation and the independence of the Federal Reserve; short-term yields are expected to decline moderately due to bets on rate cuts. Meanwhile, nearly 60% of bond strategists (21 out of 37) believe that the massive issuance of US Treasuries in the coming years to finance Trump’s tax cuts and spending plans will make it unfeasible for the Federal Reserve to significantly reduce its $6.6 trillion balance sheet. Another Reuters survey indicates that the Federal Reserve is expected to implement two rate cuts later this year, with the first occurring in June when Waller takes over as Fed Chair. The yield on the rate-sensitive 2-year US Treasury is expected to fall from the current 3.50% to 3.45% by the end of April and to 3.38% by the end of July. The survey median also shows that the benchmark 10-year US Treasury yield is expected to rise to 4.29% in a year, higher than last month’s forecast of 4.20%. (Golden Ten Data)