/U.S. 10-year yield could spike well above 2% in the next three months
U.S. 10-year yield could spike well above 2% in the next three months

U.S. 10-year yield could spike well above 2% in the next three months

Daniel Acker | Bloomberg | Getty Images

The 10-year U.S. Treasury yield is likely to hit 2% by the end of the year but could spike “well above” that in the second quarter, according to ING senior rates strategist Antoine Bouvet.

Bouvet told “Street Signs Europe” on Wednesday that the envisaged re-opening of the economy in the second quarter, when it’s hoped the vast majority of the U.S. population will be vaccinated against the coronavirus, will result in strong retail sales on the back of the U.S. government’s stimulus package.

All these factors will “contribute and conspire towards optimism in the market and then towards that spike in U.S. Treasurys,” Bouvet said, expecting yields to reach a “minimum” of 2%.

The 10-year U.S. Treasury yield, which is considered an indicator of investor sentiment on the economy because it is a benchmark for debt such as mortgage rates, hit a 13-month high of 1.6% during this past week. The yield has since move back slightly but was trading at 1.56% on Wednesday morning.

It has shot up from 1% since the end of January, amid concerns about rising inflation. These concerns have been compounded by fears that the U.S.  government’s $1.9 trillion fiscal relief package, which House Democrats are expected to pass on Wednesday, could stimulate the economy too quickly and cause a surge in prices.

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