2024 US 10-Year Yield Forecasts: Major Banks Divide After the Global Benchmark Closes 2023 at Starting Level

On the final trading day of 2023 in New York, by 2:00 p.m., the 10-year yield registered at 3.879%, slightly up from its previous year's closing figure of 3.875%.

This key benchmark for global financial markets and domestic mortgage rates in the US experienced dramatic fluctuations throughout the year. It initially plummeted to a low of 3.25% amid March's banking crisis, only to climb above 5% months later for the first time in 16 years.

However, market dynamics shifted as weaker economic data prompted a rally in bond prices, further fueled by the Federal Reserve's unexpected indication in mid-December of a greater likelihood for interest rate reductions in 2024.

Expectations within the bond market that seemed pessimistic in November had to be reconsidered when yields dipped following the Federal Reserve's dovish stance. This revision has led to a divergence among major banks, with strategists re-evaluating their forecasts.

Currently, the median projection from strategists at major global financial institutions places the 10-year US Treasury yield at 3.98% for the coming year, which is not far off from its recent mark of 3.89% at Monday's close and significantly below the pre-Fed pivot yield of 4.20%.

On the more optimistic side, TD Securities envisions the possibility of the 10-year rate descending to 3% within the next year, assuming the Federal Reserve implements rate cuts totaling 200 basis points starting in May. Conversely, Goldman Sachs and Barclays predict the yields will settle at higher levels, projecting year-end figures of 4% and 4.35%, respectively, for 2024.