10-year bond yields to rise on Fed hike expectations, but still likely to end year lower: analysts

TEN-YEAR bond yields are expected to rebound as investors begin to price in the possibility that the US Federal Reserve will be more aggressive with its hikes than previously expected. Analysts said the recent fall in bond yields was likely overdone, although rates will still end 2023 lower year on year.

Inflation and jobs data in the US last week were better than expected, suggesting that the Fed is far from done with its rate hikes.

“Investors have got ahead of themselves in underestimating the resolve of policymakers... to deal a decisive blow to inflation,” said UOB interest rate strategist Victor Yong.