Investment banks warn: Even if the Iran war ends, the upward trend in U.S. Treasury yields may be hard to reverse.
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1. Strategists from Goldman Sachs and Barclays agree that even if the Iran war ends and inflationary pressures ease, the rising momentum of U.S. Treasury yields is unlikely to be fully reversed in the short term. 2. Jonathan Hill, head of U.S. inflation strategy at Barclays, pointed out that what may truly be driving real interest rates higher are the continuously expanding debt scale, a rise in the neutral interest rate level, and the multiple interrelated impacts brought by the development of artificial intelligence technology. 3. Phillip Lee, head of real money rates sales at Goldman Sachs, stated that persistent fiscal deficits, increased issuance of government bonds, and growing concerns in the market about debt sustainability are increasingly key factors explaining why investors demand higher returns to hold long-dated bonds. He expects interest rates to continue to rise. 4. Analysts pointed out that even if the Middle East conflict comes to an end, market borrowing costs may still remain near multi-year highs, continuing to exert pressure on government finances and the broader economy.
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