According to Jinshi, ING Bank pointed out that the recovery of the U.S. Treasury term premium may pave the way for the 10-year Treasury yield to return to the key level of 5%. Last October, the U.S. 10-year Treasury yield briefly broke through 5%, with a term premium of about 40 basis points. At present, the only thing that can prevent the 10-year Treasury yield from reaching this level may be the U.S. PCE price index in March next week, which will fall back to 0.2% (currently 0.3%). Analysts said that although the escalation of tensions in the Middle East caused the 10-year Treasury yield to fall back on Friday, if the continued rise in oil prices pushes up inflation, it may lead to further reductions in the U.S. interest rate cut expectations, then the 10-year Treasury yield may resume its rise. The term premium has a huge impact on the trajectory of monetary policy. Federal Reserve officials have said that the rise in the term premium may tighten financing conditions, squeeze economic growth, and effectively help them fight inflation.
