Steven Barrow, a G10 strategist at Standard Bank, has increased his year-end forecast for 10-year US Treasury yields to 5.2%. He further projects that these yields will rise to 5.3% during the first quarter of 2027.
On September 14, the 10-year yield reached an intraday peak of 5.01%. This marks the first time the yield has surpassed the 5% threshold since 2007, excluding a brief increase observed in October 2023.
Barrow attributes his outlook to persistent inflation, robust economic growth, and an increased supply of Treasury bonds alongside ongoing fiscal deficits. Brent crude prices currently range between $108 and $111 per barrel, while the August Consumer Price Index reached 3.4% on an annualized basis.
Other market strategists, including Tracy Chen and Ian Lyngen, have also indicated that yields may remain above 5% in the medium term. They point to supply-side inflation and policy lags as primary drivers for this trend.
Rising yields impact mortgage rates and corporate borrowing costs, increasing debt servicing expenses for both the government and private entities. While existing bondholders face declining asset values, new investors gain access to rates not seen in nearly two decades.
