Treasury 10-Year yields may hit 5% in six months, T. Rowe says

Published On Oct 21, 2024, 3:57 AM

T. Rowe Price suggests that 10-year Treasury yields could rise to 5% within the next six months, driven by inflation fears and increased U.S. government spending. Despite expectations for lower yields after the recent rate cuts by the Federal Reserve, rising borrowing costs and government deficits create a scenario where yields continue to increase. The prediction contrasts with other market forecasts and hints at potential market turmoil if yields rise significantly, especially since current yields are around 4.08%.

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Stock Forecasts

TLTView TLT chart on TradingView

Negative

Given the prediction of rising Treasury yields due to inflation and fiscal spending concerns, investors may want to consider the impact on bond-related investments and the broader financial market. Rising yields typically put pressure on bond prices, suggesting a cautious stance on holding long-duration bonds.

XLFView XLF chart on TradingView

Positive

The predicted rise in yields may favor financial institutions like banks, which often benefit from widening interest rate spreads. Investors looking for strength in the banking sector could consider positions in ETFs like XLF, which encompasses a range of financial stocks.

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