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Societe Generale Forecasts Changes In U.S. Treasury Yields By 2025

02/12/2024 16:45

According to Odaily, Societe Generale has projected significant shifts in U.S. Treasury yields by the end of 2025. The bank anticipates that the yield on 10-year U.S. Treasury bonds will rise to 4.5%, while the yield on 2-year Treasury bonds is expected to decrease to 3.5%. This forecast is based on the expectation that the Federal Reserve will continue to lower interest rates, which will reduce short-term rates. However, this monetary policy is also likely to stimulate the economy and increase the fiscal deficit, thereby boosting demand for long-term government bonds and causing long-term yields to rise. Additionally, the implementation of tariffs under former President Trump's policies could elevate inflation expectations. This, combined with the U.S. government's anticipated increase in Treasury issuance to address the fiscal deficit, is expected to further drive up yields. These factors together suggest a complex interplay between monetary policy, fiscal policy, and market expectations, which could lead to significant changes in the U.S. bond market over the next few years.

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