Treasury yields look biased higher in the near term, but a real minority view says the move is almost done.
The dominant read across published research is that the recent hawkish FOMC shift — with the updated dot plot pulling near-term cuts off the table and flagging possible further hikes — has repriced the front end sharply, sending 2-year yields up. Several research notes argue sticky real rates, higher term premia, and a structurally higher neutral rate keep longer yields biased up too, with one camp targeting 5% on the 10-year before any return to 4%, citing deficit-driven Treasury supply and potential Fed balance sheet runoff.
A contrarian thread pushes back: falling crude is cooling inflation expectations, and some analysts argue yields have already peaked and will fall in the second half as the economy softens. The disagreement is largely about horizon, not direction.
On corporate credit, the consensus is clearer — researchers warn the era of ultra-tight investment grade spreads is ending, with AI-linked megacap issuance flagged as a specific widening catalyst. One strategic view still likes IG bonds for multi-year real returns.