The 10-year Treasury yield has risen towards 5%, marking a significant milestone since 2007. The surge is driven by concerns over strong economic data, inflation fears, and political uncertainty.
Yields jumped on Tuesday to 4.79%, with the 30-year Treasury hovering at 4.98%. Market expectations of a growing economy and fear of returning inflation have contributed to the spike. Gennadiy Goldberg, head of US rates strategy at TD Securities, believes the US economy is stabilizing at a stronger level.
However, it’s no surprise for some experts, as markets had discounted the impact of corporate tax cuts and stricter immigration laws that could widen the deficit and aggravate inflation. The swift Republican win pushed yields up in October.
TD Securities’ target rate is 4.30%, roughly the halfway mark to the December sell-off. Goldberg expects no rate cuts in the first half of the year, followed by four cuts for a total of 100 basis points. He suggests leaving room for a potential ceiling of 5.05% if yields continue climbing amid near-term payroll and inflation data.
For investors, now is an attractive starting point for returns. Higher yields provide an opportunity to earn profits from lower bond prices. However, the range remains wide, and investors should closely watch for directional shifts that could signal economic acceleration or stabilization.
Source: https://www.businessinsider.com/when-to-buy-us-bonds-treasurys-high-yields-interest-rates-2025-1