Published research this week leans heavily toward "higher for longer" US Treasury yields, but sees US corporate credit as a solid total-return play.
The dominant argument across recent analyst notes: sticky inflation, elevated oil, and Middle East tensions are keeping the Fed on hold — and pushing long-end yields up rather than down when shocks hit. One camp of researchers projects the Fed Funds Rate at 4.25%–4.50% into early 2027, with growth above trend and inflation overshooting near 3.5%. Structural supply is another headwind flagged in the literature: a federal deficit above $2 trillion and debt topping 120% of GDP next decade.
On credit, the published consensus is constructive — 12 straight weeks of inflows into investment grade, all-in yields above 5.25%, and carry-driven total returns pegged at 6–8%. Some analysts caution spreads are historically tight and could widen.
A contrarian strategic view argues 10Y Treasuries deliver positive returns across nearly all scenarios — including a potential ~20% return if a growth scare drags yields toward 2%. Cyclical vs. strategic — not truly opposed.