Bank of America expects the benchmark yield on US Treasury bonds to continue rising, remaining above 4.2% at the start of the third quarter of 2026, noting that this development supports the continuation of the upward trend in yields during the coming period.
The bank explained in a note issued on Wednesday that the yield on 10-year US Treasury bonds is likely to rise to 4.65%, with the possibility of reaching 4.82% if the factors supporting higher yields continue.
The memo added that the bank’s baseline scenario for the path of borrowing costs is based on the yield on 10-year bonds remaining above 4.20%, which was indeed achieved at the beginning of the third quarter.
The bank indicated that the upward trend in yields is likely to continue as long as the benchmark yield remains above 4.45%, currently exceeding 4.50%. At the same time, it noted that certain seasonal factors may limit the pace of this increase in the coming period.
US Treasury yields reflect investors' expectations about inflation, monetary policy, and economic growth prospects, with higher yields typically increasing borrowing costs for governments, businesses, and individuals.
Markets are closely watching yield movements, given their direct impact on stock valuations, particularly technology stocks, as well as their effect on the performance of the dollar and global markets.
The continued high yields also reinforce expectations that the Federal Reserve will keep interest rates high for longer, or proceed with further monetary tightening if inflationary pressures persist.
