HSBC Scoffs at 6% Fear for US 10-Year Treasury Yield...Forecasts 4.65% by Year-End

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The US 10-year Treasury yield retreated from a 19-year high. Contrary to some market forecasts of reaching 6%, it is expected to settle at around 4.65% by year-end.

According to BeInCrypto, a virtual asset and financial media outlet, on September 22 (local time), global investment bank HSBC projected that the US 10-year Treasury yield would fall to 4.65% by the end of the year. The 10-year yield reversed from 5.041%, a 19-year high recorded last week, to 4.951%. Falling international oil prices and signs of easing tensions related to Iran contributed to cooling down the bond market's overheating.

HSBC generally raised its Treasury yield curve forecasts. The year-end forecast for the 2-year Treasury yield was raised from the previous 3.85% to 4.2%. The 10-year target was also increased from the previous 4.3% to 4.65%. The baseline scenario predicts that the Federal Reserve (Fed) will keep the benchmark interest rate frozen until 2027. However, with intense internal discussions within the Federal Open Market Committee (FOMC), the probability of an additional rate hike within this cycle is assessed to be fifty-fifty.

Among major Wall Street institutions, a heated debate continues regarding the path of bond yields. iCapital projected a 5.3% reach based on oil price shocks. Deutsche Bank (DB) analyzed past monetary tightening cycles and presented a 6% rise as a 2027 scenario. Matt Maley, Chief Market Strategist at Miller Tabak, cited 4.8% as a key test, warning that whether this figure is breached will have repercussions across the entire asset market.

Currently, institutions' 10-year yield forecasts are concentrated in the 4.65% to 5.3% range. The stabilization of US Treasury yields is expected to act as a key variable supporting the recovery of investor sentiment across all risk assets, including virtual assets and decentralized finance (DeFi).

[Key Article Summary]

-The US 10-year Treasury yield retreated from a high of 5.041% to 4.951%, entering a breather.

-HSBC dismissed the 6% surge theory and presented a year-end target of 4.65% for the 10-year Treasury yield.

-With differing high-yield forecasts among Wall Street institutions such as iCapital (5.3%) and Deutsche Bank (6%), breaching 4.8% is considered a short-term watershed.

*Disclaimer: This article is for investment reference only and does not take responsibility for investment losses based on it. The content should be interpreted for informational purposes only.*