10 10-Year US Treasury Loading... : Investor Sentiment and Bull/Bear Views

He sees fair value for 10-year Treasury yields around 4% and a near-term equilibrium around 4.5%, below current levels; inflation softness in housing and goods supports lower yields and supports the long end.

There is a geopolitically driven supply-demand imbalance in the Treasury market, with the US needing to finance massive deficits while global savings growth slows. This will force nominal yields higher to compete for capital, with fair value for the 10-year yield around 5.75% to 5.80% and the 30-year yield near 6.50%.

The 10-year US Treasury yield could reach 5% by year-end due to a rising term premium driven by Middle East uncertainty, inflation risks, and the upcoming US midterms.

A geopolitically driven supply-demand imbalance in the Treasury market, massive AI capex competing for capital, and a structural decline in global savings will force long-term yields significantly higher, with fair value for the 10-year around 5.75% and the 30-year near 6.50%.

Inflation is expected to be more persistent and broader than many anticipate, and despite the Fed's hawkish tone, there is no near-term opportunity to extend duration; the portfolio remains very underweight duration as bond yields may not decline meaningfully.

The US 10-year Treasury yield is too high relative to oil prices and the impending Fed decision; the Fed will hold rates, remove the easing bias, and signal future cuts in the dot plot, removing overpriced rate hike expectations, which will allow bonds to rally this week.

Inflation may be peaking as core PCE and underlying measures improve, tariff inflation recedes, and oil pass-through is uncertain. Near-term inflation uncertainty is pricing fair risk into intermediate Treasuries (belly of curve), making them attractive on a risk-return basis. However, long-dated Treasuries face additional upward pressure from secular fiscal deficits driven by AI, energy, and global reshoring, which should raise term premium and cause yields to rise further. Therefore, investors should favor the belly of the curve versus the long end, and the 10s30s spread should widen.

Rick Rule argues that saving in a 10-year US Treasury at roughly 4.2% while true inflation is 8-10% means the investor is guaranteed to lose purchasing power. He views CPI as understating real inflation and expects the government to inflate away the net present value of its obligations, making nominal fiat-denominated savings instruments unattractive.