Wall Street bond bear: The yield on the 10-year US Treasury bond will rise to 5.5% by the end of the year.

One of the biggest bond bears on Wall Street has had a strong start to the year, as the US Treasury yield is approaching his prediction. Padhraic Garvey, Global Head of Debt and Interest Rate Strategy at ING Group, predicts that by the end of 2025, the yield on the 10-year US Treasury bond will rise to 5.5%, while the yield currently stands at around 4.63% on Monday. His forecast for the 10-year US Treasury bond yield is about 40 basis points higher than the second most pessimistic prediction. Garvey's prediction is based on the expectation that the Federal Reserve will maintain restrictive interest rates to offset the risks of price pressure from US President Trump's tariff and tax policy, as well as investors hesitating due to ongoing Federal Reserve risks. Garvey said, "US inflation is still above 2.5%, and the budget deficit is also there. Privately, we believe that the yield on the 10-year US Treasury bond will rise to 5%." It is worth noting that a year ago, Garvey and his team were more optimistic, expecting the yield on the 10-year US Treasury bond to fall to a low of 3.5% by the end of 2024. If Garvey is correct, this year will be disappointing for bond investors. In fact, apart from Garvey, T. Rowe Price also predicts that the yield on the 10-year US Treasury bond will rise to 5% in the first quarter of this year and may eventually reach 6%. The chief strategist Zachary Griffiths and his team at the credit research firm CreditSights also believe that there is further room for the yield on US Treasury bonds to rise. Since the historic losses in 2022, the expectations that the Federal Reserve would significantly raise interest rates from that year onwards, leading to an economic downturn and investors flocking to buy bonds, have not materialized. While inflation has slowed down, it has not returned to pre-pandemic levels. The US stock market saw significant gains in 2023 and 2024. By the end of 2023, the yield on the 10-year US Treasury bond was 3.88%, with minimal changes throughout the year; in 2024, it rose by approximately 70 basis points to 4.57%. The Evercore ISI strategist team recently stated that rising US Treasury yields pose the biggest challenge to the stock market bull market, warning that a yield on the 10-year government bond exceeding 4.75% could trigger a "longer, deeper stock market correction."