Reuters Survey: U.S. Long-Term Bond Yields Expected to Stabilize Then Rise This Year, Massive Issuance May Make Fed Balance Sheet Reduction "Impractical"

Jin10 Data, February 12 — A Reuters survey shows that long-term U.S. Treasury yields will remain stable in the short term but are expected to rise later this year due to concerns over inflation and the Federal Reserve's independence; meanwhile, short-term yields are expected to decline mildly on bets of rate cuts. At the same time, nearly 60% of bond strategists (21 out of 37) believe that the massive government bond issuance needed to finance Trump's tax cuts and spending plans over the coming years will make a significant reduction of the Fed's $6.6 trillion balance sheet "impractical." Another Reuters survey indicates that the Fed is expected to implement two rate cuts later this year, with the first in June when Jerome Powell takes over as Fed Chair. The yield on the 2-year U.S. Treasury, which is sensitive to interest rate changes, is expected to fall from the current 3.50% to 3.45% by the end of April and 3.38% by the end of July. The median forecast in the survey also shows that the benchmark 10-year U.S. Treasury yield is expected to rise to 4.29% in one year, up from the previous month's forecast of 4.20%.
(From Jin10 Data App)