US Treasury yields sit at the center of a sharply split market — but both sides quietly agree the curve is steepening.
The dovish case, held by a strong majority of published research, leans on the July jobs report: a surprise payroll loss of 23,000, falling participation, and soft wages have pulled Fed hike odds down to roughly 44–45%. Researchers in this camp argue softer upcoming CPI and PPI prints would drag real rates and the 10-year yield lower, with some going further to suggest the Fed is done hiking and eventual cuts are on the table.
A contrarian thread of recent research pushes back hard. These analysts point to the 10-year already above 5.2% — a 2007 high — and argue heavy government borrowing, sticky inflation, and geopolitical risk keep upward pressure on yields. One strategic view frames it as the end of a four-decade decline in rates. An extreme scenario floated in the research even sketches 8% if inflation and Middle East risks escalate.
Where both camps converge: institutional positioning favors a steeper curve, with selling at the long end and buying at the front. On credit, some recently published views flag widening spreads on mortgage-backed securities and a sharp repricing in Nvidia's bonds after its large AI capital commitment.