Market Expects Higher Fed Terminal Rates to Drive US Bond Yields
Stability in inflation expectations at 2.4% suggests that fiscal or inflation fears are not the primary drivers behind surging US long-term bond yields, according to Aidan Garrib, head of global macro strategy and research at PGM Global.
Inflation expectations remain stable at around 2.4%, and term premium data does not support a narrative of fiscal profligacy, indicating the rise in yields is not primarily driven by these factors.
Instead, the ACM model shows the 10-year risk-neutral rate closely tracking with Fed policy expectations, with the market pricing in additional rate hikes from the central bank.


