Investing.com - The cap of the Ten-Year Treasury Yield for this year is predicted to be around 3.85%, as per BCA Research, unless certain conditions come into play. The rate reclaimed its position at the end of May and has maintained it through June after a sharp decline in bond yields due to Silicon Valley Bank's collapse in March.
BCA researchers anticipate core inflation to have significant downsides over the next six months, which strengthens their belief in the steadiness of the ten-year rate even after indications from Federal Reserve's June meeting about two more potential rate hikes this year.
However, there are risks associated with this scenario: stickiness in non-housing core services inflation may cause higher bond yields if wage growth encourages further Fed rate increases throughout H2; market expectations about short-term interest rates might affect future Fed actions; and strong consensus on bullish bond view can act as a contrarian indicator.
Meanwhile, market participants remain focused on upcoming congressional testimonies by Fed Chairman Jerome Powell regarding monetary policy and interest rates outlook for 2023 while considering recent remarks by US economists Alex Pelle and Steven Ricchiuto at Mizuho Securities who suggest that markets may not have taken previous messages seriously enough.