According to Odaily, Societe Generale has projected significant shifts in U.S. Treasury yields by the end of 2025. The bank anticipates that the yield on 10-year U.S. Treasury bonds will rise to 4.5%, while the yield on 2-year Treasury bonds is expected to decrease to 3.5%. This forecast is based on the expectation that the Federal Reserve will continue to lower interest rates, which would reduce short-term rates. However, this monetary policy is also likely to stimulate the economy and increase the fiscal deficit, thereby boosting demand for long-term government bonds and driving up long-term yields.
Additionally, the implementation of tariffs under former President Trump's policies could elevate inflation expectations. In response to the fiscal deficit, the U.S. government is expected to increase the issuance of Treasury bonds, which would further contribute to the rise in yields. These factors combined suggest a complex interplay between monetary policy, fiscal measures, and market expectations that could shape the trajectory of U.S. Treasury yields over the next few years.