U.S. Treasury Selloff Reflects Oil, Economic Strength; Looks Overdone
Dow Jones
Sep 29
0520 GMT - The rise in the 10-year U.S. Treasury yields to approximately 5.25% reflects higher oil prices and a strong U.S. economy more than AI debt issuance or fiscal concerns, according to Capital Economics' James Reilly. Capital Economics sees the Treasury selloff as overdone, and continues to forecast that the 10-year yield will fall this year and drop all the way to 4.25% by the end of 2027 as the Fed fails to tighten by as much as investors are discounting. "The selloff mainly seems to reflect changes in near-term expectations," he says, adding that these rate expectations have largely been driven by energy prices. The other key driver has been investors pricing in stronger U.S. economic growth and more persistent inflation.
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