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3 Reasons Investors Should Be Ready for Bond Market Sell-Off to Worsen
businessinsider.com • • business
Key Points:
- BNP Paribas forecasts 30-year Treasury bond yields rising to 5.6% soon, up from 5.43% currently and 4.83% at the start of the year, which negatively impacts bond values and stock performance.
- Rising long-term yields are driven by higher oil prices, inflation concerns, ballooning government debt, and strong borrowing demand from both the government and AI companies.
- The Federal Reserve's ongoing rate-hike cycle is expected to increase the US government's interest expenses by up to $168 billion over two years, significantly straining fiscal resources.
- The US budget deficit is widening due to tariff rollbacks, refunds, and rising interest rates, creating a feedback loop that pressures yields further.
- Despite expectations of reduced spending with potential Democratic control of Congress, BNP warns fiscal spending may remain high, especially with planned increases in defense budgets, supporting their view of rising long-term yields.
