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Bond Market Turns Attention to Risk of U.S. Yields Cracking 2%

  • ING, BNP see 10-year yields rising more than 50 basis points
  • Treasury liquidity is emerging as catalyst for future selloff
Surging Treasury Yields Show Stimulus Impact Still Getting Priced In
Photographer: Al Drago/Bloomberg
Updated on

The Treasury market may be just one spark away from exploding and sending 10-year yields all the way up to 2%, suggesting that the rout of 2021 may not yet be over and raising the chances that other assets like emerging-market bonds might also be living on borrowed time.

Analysts are now putting the target on Treasury yields around half a percentage point higher than current levels following the rapid, reflation-fueled selloff that took the market by storm last week. Should that happen, it’s not just developed markets that will be left reeling. Developing-market bonds are increasingly at risk as investor concern grows about stretched valuations and the chances of a policy misstep by the Federal Reserve.