Market veteran predicts bearish outlook for US Treasury yields

Steven Barrow, G10 strategist at Standard Bank, just raised his year-end forecast for the 10-year US Treasury yield to 5.2%. That’s up from an already aggressive 5% call he made earlier in the year, and he’s not stopping there: Barrow expects yields to push to 5.3% in the first quarter of 2027. On September 14, the 10-year yield hit an intraday high of 5.01%, punching through the round-number barrier that markets have been nervously watching for months. The last time this yield closed above 5% was back in 2007, with only a brief spike in October 2023 offering a taste of what was to come. Why yields are climbing Brent crude prices have been hovering between $108 and $111 per barrel, fueled by supply concerns related to tensions with Iran. August’s Consumer Price Index came in at 3.4% annualized. Add in robust economic growth, increased Treasury supply hitting the market, and persistent fiscal deficits, and you get the ingredients for a yield environment that makes 5% look less like a ceiling and more like a floor. Barrow isn’t the only strategist seeing higher yields ahead. Tracy Chen and Ian Lyngen have both signaled that yields could exceed 5% in the medium term, citing continued ...