Wall Street analysts predict a decline in short-term U.S. Treasury yields by 2025, despite potential risks from trade and tax policies. Strategists expect the 2-year Treasury yield, sensitive to Federal Reserve rate policies, to drop by at least 0.5 percentage points over the next year. The Fed has hinted at fewer rate cuts next year, complicating yield forecasts.
The median forecast from 12 strategists suggests the 2-year yield will decrease to approximately 3.75% in a year. The 10-year Treasury yield is expected to be around 4.25% by the end of 2025, down from current levels. Factors like high neutral rates and inflation risk premiums may keep long-term yields elevated.
Market views vary, with Morgan Stanley forecasting faster Fed rate cuts and a 10-year yield drop to 3.55% by December next year. In contrast, Deutsche Bank sees yields rising to 4.65%, citing strong economic growth and inflation.
