Jim Zelter, president of Apollo Global Management, projects that 10-year US Treasury yields will stabilize between 4.25% and 5.5% for the foreseeable future. This forecast marks a shift from the sub-3% environment observed over the last decade, driven by factors such as deglobalization, persistent fiscal deficits, and significant capital expenditure on AI infrastructure.
The firm anticipates that corporate debt issuance from major technology companies, including Microsoft, Google, Amazon, and Meta, may exceed net US Treasury issuance. These corporations require financing in the hundreds of billions to build out data centers and chips. Apollo’s research suggests that yields could exceed 5.2% by mid-2026 if fiscal or external pressures intensify.
Apollo’s credit origination business has reported spreads of 280 to 350 basis points over Treasuries in recent quarters. With a base rate of 4.5%, the firm estimates returns in the high single digits before leverage. Chief economist Torsten Slok supports the view that long-term Treasury yields will likely remain above traditional expectations due to ongoing macroeconomic uncertainty.
The firm warns that risks, such as a potential fiscal crisis, renewed inflation, or a decline in confidence regarding US government debt, could push 10-year yields significantly beyond the 5.5% threshold.
