US Treasury yields are caught in a genuine tug-of-war, with published research split on where the 10-year heads over the next 6–18 months.
The higher-yields camp rests on three arguments. Several recent research notes point to a resilient labor market, sticky core inflation, and AI-driven capex plus loose fiscal policy keeping price pressures elevated. A separate line of analysis adds a supply story: heavy Treasury and corporate issuance forces buyers to demand better yields, while structural deficits at peacetime highs reinforce the pressure.
The contrarian view sees yields drifting lower into 2027. Some analysts argue falling oil prices, fading stimulus, and eventual Fed cuts toward a 3% neutral rate pull yields down. One thread of research goes further, citing evidence that major AI breakthroughs have historically pushed real yields lower as precautionary savings rise. Others note the government simply cannot afford sustained high rates given debt-service costs.
Elsewhere in fixed income, published views lean constructive on long-dated Treasuries and select municipal bonds, while flagging rising stress in corporate credit spreads if rates stay elevated.