The 10-year US Treasury yield to rise in 2022, increasing to more than 2.50% at the end of the year.
- With the 10-year yield averaging around 1.76% in January, it is possible to reach 2.00%, but 2.50% seems a more ambitious forecast for year-end.
- The combination of strong economic growth, consistent inflation, rate hikes, and balance sheet shrinkage could propel the yields to ambitious levels.
- The inflation-adjusted 10-year yield could be near zero, a move that could disrupt financial markets in the short term.
The Treasury yield for this business cycle could rise to nearly 2.5%, subject to the ability of the economy to unexpectedly tolerate higher policy rates.
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