On January 7, Financial Associated Press reported (Editor: Xiaoxiang) that at the beginning of the new year, while market participants are speculating how many more times the Federal Reserve can cut rates, a scene that worries many cross-asset market traders continues to unfold: the long-term bond yields in the USA showed no signs of stopping their rise towards 5.

On Monday, most yields of US Treasuries across different maturities rose again. Among them, the yield on the 30-year US Treasuries increased by 3.8 basis points to 4.855%, reaching a high of 4.861%, the highest since November 2023.

The 10-year US Treasury yield, known as the anchor for 'Global Asset Pricing,' also touched 4.64% during Monday's trading, reaching its highest level since May. Since December, the 10-year US Treasury yield has accumulated an increase of approximately 50 basis points, now less than 10 basis points away from the peak it reached in April last year.

One of the reasons driving the further rise in long-term bond yields is supply pressure, as the first of three US Treasury auctions this week experienced weak demand, and a large amount of high-rated corporate bonds are also competing for investors' Cash.

On Monday, the US Treasury auctioned $58 billion in three-year bonds, experiencing overall weak demand—with the winning yield at 4.332%, one basis point higher than the secondary market yield before the auction, and the bid-to-cover ratio at 2.62 times. The US Treasury will also auction $39 billion in 10-year bonds on Tuesday and $22 billion in 30-year bonds on Wednesday. Due to former US President Jimmy Carter's funeral being held on Thursday, the auction days for these two bonds are one day earlier than usual.

Gregory Peters, Co-Head of Fixed Income at PGIM, stated in an interview that there is a large amount of Bonds in the market, and the supply keeps coming. Additionally, inflation may be more persistent or turn upward, which puts pressure on the bond market.

FHN Financial macro strategist Will Compernolle pointed out that 'there is great uncertainty about what will happen after the new president takes office. What impact will this have on Treasury issuance? I don't think anyone can really determine what the net impact will be, but the upward risk of yields is greater.'

Concerns about the policies of Trump after taking office will increase inflation, and the prices of US bonds have been under pressure in recent weeks. On Monday, after The Washington Post revealed that Trump's aides are considering narrowing the scope of the tariff plan, the dollar dropped significantly during the session, helping US bonds recover some lost ground, as the market believed this move would alleviate inflation worries. However, following Trump's subsequent denial, the market trend quickly reversed.

Federal Reserve Board member Cook also stated on Monday that, given the strong labor market and ongoing inflation pressures, policymakers can act more cautiously on interest rate cuts.

Institutions: The yield on 10-year US Treasury bonds is expected to reach 5.5% this year.

With the further rise in US Treasury yields, many of Wall Street's biggest bond shorts have clearly performed well since the start of the new year, as market trends are increasingly aligning with their strong non-mainstream predictions.

Padhraic Garvey, the global head of debt and interest rate strategy at ING Groep, recently predicted that the yield on 10-year US Treasury bonds will rise to around 5.5% by the end of 2025. This is almost the most pessimistic forecast among industry institutions for US bonds.

It is worth mentioning that among the 51 predictions compiled by the industry regarding the trajectory of US bonds by the end of the year, only three predicted that yields would rise from current levels, while ING's prediction is the most pessimistic, about 40 basis points higher than the second most pessimistic forecast.

Garvey stated, "I do not plan to return to consensus predictions. (The yield on 10-year US Treasury bonds) testing 5.5% is reasonable."

Clearly, Garvey's prediction is based on the expectation that the Federal Reserve will maintain restrictive interest rates to offset the price pressure risks caused by the tariffs and tax cuts policies of the soon-to-be-elected president Trump, as well as investors' concerns about the federal deficit.

If Garvey's prediction is correct, this year will undoubtedly be another disappointing one for Bonds investors. Despite the Federal Reserve cutting rates a total of 100 basis points in its last three meetings, Bonds investors will only achieve modest gains in 2024. Since the end of the long bull market in Bonds in 2021, US Treasuries have been unable to emerge from the mire.

Apart from ING Groep, the investment management company T. Rowe Price has also predicted that in the first quarter of 2025, the yield on 10-year US Treasuries will reach 5%, and even hinted that it may ultimately rise to 6%.