Analysis: US Treasury selloff is not mainly driven by AI-related issuance; 10-year yield may fall to 4.25% by end of next year

Odaily News: Capital Economics believes that the selloff in US Treasuries mainly stems from changes in market expectations for near-term interest rates. The 10-year US Treasury yield is now approaching its June 2007 high. Economist James Reilly noted that this move reflects rising oil prices and a strong US economy more than it does AI-related debt issuance or fiscal concerns.

Reilly expects that as the Federal Reserve tightens less than investors currently anticipate, the 10-year US Treasury yield will "fall sharply to 4.25%" by the end of 2027. He believes that although AI-related debt issuance will continue to put upward pressure on yields, its impact is not as large as media reports suggest and will be offset by changes in monetary policy expectations. As for fiscal concerns, he added that no substantial fiscal news has recently emerged that would be enough to trigger a sharp surge in yields. (Sina Finance)