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

Deep Tide TechFlow News, February 12 — According to Jintou Data, a Reuters survey shows that long-term U.S. Treasury yields will remain stable in the short term, but due to concerns over inflation and the Federal Reserve’s independence, they are expected to trend upward later in the year; short-term yields are expected to decline mildly due to expectations of rate cuts. Meanwhile, nearly 60% of bond strategists (21 out of 37) believe that the massive issuance of government bonds in the coming years to finance Trump’s tax cuts and spending plans will make the Federal Reserve’s plan to significantly reduce its $6.6 trillion balance sheet infeasible. Another Reuters survey indicates that the Federal Reserve 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 rates, 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 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%.