Capital Economics said the recent sell-off in U.S. Treasuries was mainly caused by a shift in market expectations for near-term interest rates, rather than artificial intelligence-related debt issuance or fiscal concerns. The firm noted that the 10-year U.S. Treasury yield is now close to its June 2007 high. Economist James Reilly said the move reflects higher oil prices and a strong U.S. economy more than concerns tied to AI financing or government borrowing. He expects the 10-year yield to fall sharply to 4.25% by the end of 2027 as Federal Reserve tightening proves less aggressive than investors currently expect. Reilly also said AI-related issuance may continue to put upward pressure on yields, but its effect is smaller than some media reports suggest and should be offset by changes in monetary policy expectations. On fiscal issues, he added that there has been no meaningful fiscal news recently that would be enough to trigger a sharp surge in yields. The report was cited by Sina Finance.
Capital Economics said the recent sell-off in U.S. Treasuries was mainly driven by a change in market expectations for near-term interest rates, according to Sina Finance cited by Odaily.
The 10-year U.S. Treasury yield is now close to its June 2007 high. Economist James Reilly said the move has more to do with rising oil prices and a strong U.S. economy than with artificial intelligence-related debt issuance or fiscal worries.
Reilly expects the 10-year yield to fall sharply to 4.25% by the end of 2027 as Federal Reserve tightening comes in below what investors currently expect.
He added that AI-related issuance will continue to put upward pressure on yields, but not to the extent suggested in media coverage, and that effect should be offset by changes in monetary policy expectations. On fiscal concerns, he said there has been no substantive fiscal news recently that would be enough to cause a sharp jump in yields.
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