Reuters Survey: U.S. Long-Term Bond Yields Expected to Stabilize First, Then Rise Within the Year; Massive Debt Issuance May Make Fed's Balance Sheet Reduction "Unfeasible"

Odaily According to a Reuters survey, long-term U.S. Treasury yields are expected to remain stable in the short term but trend higher later in the year due to inflation and concerns over Federal Reserve independence; short-term yields are expected to decline modestly due to rate cut bets. Meanwhile, nearly 60% of bond strategists (21 out of 37) believe that the massive Treasury issuance required to fund Trump's tax cuts and spending plans over the coming years will make it unfeasible for the Federal Reserve to significantly reduce its $6.6 trillion balance sheet. Another Reuters survey indicates that the Fed is expected to implement two rate cuts later this year, with the first one in June when Waller takes over as Fed Chair. The interest rate-sensitive 2-year U.S. Treasury yield is forecast to fall from the current 3.50% to 3.45% by the end of April and 3.38% by the end of July. The survey median also shows that the benchmark 10-year U.S. Treasury yield is expected to rise to 4.29% in a year, higher than last month's forecast of 4.20%. (Jin10)