投资者仍担心债券市场环境可能进一步恶化，Columbia Threadneedle Investments全球利率策略师Ed Al-Hussainy表示：More and more investors now believe that the USA economy can withstand higher interest rates, and inflation threats will persist. Analysts suggest that if Trump stimulates inflation by increasing tariffs and is unable to control the increase in US debt supply through budget deficit cuts, the 10-year yield could easily surpass 5%.
Over the past two years, Wall Street investors have been optimistic about USA Treasury Bonds, but the results have been disappointing, and investors' attitudes are now becoming more cautious.
According to a report from The Wall Street Journal on Monday, in recent weeks, fund managers have been selling off USA Treasury Bonds, and savers have also withdrawn funds from long-term Bond Funds, pushing the two-year yield of USA Treasury Bonds to the upper limit of the Range.
Investors remain concerned that the Bond market environment may further deteriorate, Columbia Threadneedle Investments' Global Rates Strategist Ed Al-Hussainy stated:
Cash yields have exceeded 4%, which is a benchmark that is hard to surpass.
Skepticism toward USA Treasury Bonds represents a significant shift on Wall Street; in recent years, investors generally believed that interest rates would struggle to rise significantly. However, now an increasing number of investors are beginning to believe that the economy can withstand higher interest rates, and the threat of inflation will persist.
A previous article from Wall Street Insights pointed out that the number one theme for the Global market in 2025 is 'higher for longer' rates making a comeback. The chief economist of Apollo stated that from the perspective of the Federal Reserve's short-term expectations, long-term expectations, or market expectations, the forecast for USA interest rates is on the rise, with the FOMC expecting the federal funds rate to remain at current levels by the end of 2026.
These bets have impacted Bond returns. As of December 26, the ICE BofA USA Treasury Bond Index had an annualized yield of only 0.4%, far lower than the 5.2% yield of short-term Treasury Bills. According to FactSet data, this month BlackRock's iShares 20+ Year Treasury Bond ETF has seen an Outflow of $5.3 billion, potentially setting a record for the largest monthly Outflow in the fund's 22-year history.
The rise in Treasury Bond yields has pushed up a range of borrowing costs. The 30-year mortgage rate has approached 7% again, further suppressing the Real Estate market, and pressure in the bond market may also squeeze risk assets.
Looking ahead, BMO Wealth Management's Chief Investment Officer Yung-Yu Ma stated:
If Trump stimulates inflation through increased tariffs and fails to control the increase in the supply of U.S. Treasuries by cutting the budget deficit, the 10-year yield could easily surpass 5%.
