US Treasury Yields Under Pressure, Institutions Predict Stock Market Rebound Will Not Sustain and Reverse Yield Trends

John Higgins, an analyst at Capital Economics, noted in a report that US Treasury yields may face further pressure in the short term due to higher-than-expected inflation data. On Tuesday, the 2-year Treasury yield rose more than the 10-year yield, indicating an increased market expectation for tighter Federal Reserve policies. In terms of long-term government bonds, the rise in real yields is the main contributing factor to the increase, suggesting that the driving forces behind this trend are market expectations for real interest rates and term premiums, rather than inflation risks. Capital Economics expects that if the recent stock market rebound cannot be sustained, the trend in yields may reverse. Additionally, the institution warns that if an artificial intelligence bubble bursts in the future, the strength of the market rebound may not match that of the internet bubble burst period, as the Federal Reserve is unlikely to implement rate cuts of the same magnitude.

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