Capital Economics: The 10-year US Treasury yield may drop to 4.25% by the end of 2027
智通财经2026/09/28 14:01Show original
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Capital Economics believes that the sell-off in US Treasuries is mainly due to changes in market expectations regarding short-term interest rates. Currently, the 10-year US Treasury yield is close to the highs seen in June 2007. Economist James Reilly points out that this trend reflects more the rise in oil prices and the strong performance of the US economy, rather than being driven by AI-related bond issuance or fiscal concerns. Reilly expects that, as the Federal Reserve’s tightening is less than what investors currently anticipate, the 10-year US Treasury yield will “drop sharply to 4.25%” by the end of 2027. He believes that while AI-related bond issuance will continue to exert upward pressure on yields, its impact is not as significant as media reports suggest and will be offset by changes in monetary policy expectations. As for fiscal concerns, he adds that there have been no substantial fiscal developments recently sufficient to trigger a significant surge in yields.
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