Market Predicts Bear Steepening: Barclays Projects 10-Year Treasury Yield Could Reach 4.95%

BlockBeats News, August 25th: PredictIt markets Kalshi and Polymarket both indicate a higher probability of the 10-year U.S. Treasury yield continuing to rise this year. According to Kalshi, there is a 56% probability that the 10-year Treasury yield will reach or exceed 4.75% by the end of 2026, with a 27% probability of exceeding 5%; Polymarket, on the other hand, shows that there is a two-thirds chance of the 10-year Treasury yield surpassing 4.8% at least once this year.

Despite U.S. Treasury Secretary Yellen's efforts to lower the yield by expanding long-term Treasury repurchases, market sentiment is not optimistic. Barclays strategists believe that factors such as inflation stickiness, fiscal deficits, government bond supply, and term premium could still drive the yield higher, with the estimated fair value for the 10-year Treasury yield at around 4.95%, approximately 25 basis points higher than the current level.

Furthermore, rising Japanese government bond yields and increased AI capital spending could further weaken overseas investors' demand for U.S. Treasuries. At the same time, the 10-year Treasury yield at around 4.7% has already started to pose a stronger competition to U.S. stocks, indicating that the market may be transitioning from the "TINA" (There is No Alternative) era to the "TARA" (There Are Real Alternatives) era.