According to a report, Dan Ivascyn, Chief Investment Officer of bond fund management company PIMCO, stated that the benchmark 10-year U.S. Treasury yield could climb to 6% for the first time since 2000, driven by elevated oil prices intensifying inflation concerns and market unease over America's swelling public debt.
U.S. Treasury yields serve as the benchmark for global borrowing costs and asset prices. The 10-year Treasury yield has risen nearly 120 basis points this year and currently sits just below the 5.34% level reached last week, which was the highest since 2002.
Ivascyn said on Friday that a sharp rise from the current 5.29% level is "feasible" in the near term, citing factors such as hedge funds unwinding losing bond positions. "From a short-term trading perspective, it's certainly possible, because some of the activity we've seen over the past few weeks is related to negative technical factors, to stop-loss selling by platform hedge funds and other leveraged investors. You could certainly reach that level," he said.
He also noted that if Treasury yields rise further, it could weigh on risk assets such as equities and corporate bonds; a move to 5.5% or higher could trigger "pronounced weakness in risk markets like credit and equities."
Global bonds have faced heavy selling pressure this year, as surging energy costs push inflation higher and the AI boom boosts economic growth, prompting investors to position for interest rates staying higher for longer. Bond yields move inversely to prices, rising when prices fall. Global bond yields have soared accordingly, with the 10-year U.S. Treasury yield posting its largest quarterly gain this century in the three months through September.