UBS: Forecasts that Federal Reserve interest rate cuts will cause the 10-year U.S. Treasury yield to fall to 3.50%

UBS data on November 10th states that the rapidly growing U.S. debt means investors will continue to demand higher term premiums to invest in long-term government bonds. This will cause the yield curve to steepen again. However, UBS analysts indicate that the 10-year U.S. Treasury yield will still decline because the Federal Reserve may cut interest rates further. They expect the Fed to lower rates to a neutral level—an estimated level that neither stimulates nor restricts the economy, which is roughly in line with market expectations. UBS forecasts that the 10-year U.S. Treasury yield will fall to 3.50% next year and then rise back to 4% by the end of 2026.