Published research this week points overwhelmingly in one direction on US Treasuries: yields are more likely to rise than fall across the curve, from 2-year to 30-year.
The bull case for higher yields rests on reinforcing forces. Fiscal strain is central — researchers link US current-account and budget deficits (near 4% and 8% of GDP) to foreign financing needs that structurally lift long rates, with one analysis flagging a projected ~$2.1 trillion 2026 deficit widening swap spreads. Supply is another concern: recent notes warn that weak auction demand and record debt issuance, partly driven by AI-related capital needs, add pressure. On policy, several published views see markets pricing roughly 30bps of additional Fed tightening by end-2026, with the 2-year yield sitting well above the fed funds rate. Oil supply risks and potential Japanese reserve liquidation are cited as further upside risks to yields.
A contrarian thread sees 10-year yields drifting lower on longer horizons — one view targets 4.55% by end-2027 — but this is contingent on inflation cooling and energy shocks fading, not a near-term call.