US Treasury 10-Year Term Premium Turns Positive Amid Economic and Election Dynamics
The shift in the term premium reflects economic resilience, election uncertainty, and recalibrated expectations for Federal Reserve interest rate cuts.
- The 10-year Treasury term premium moved into positive territory for the first time since July, standing at 0.034% on Monday.
- This change follows a rise in Treasury yields, driven by strong U.S. jobs data and adjusted expectations for future interest rate cuts by the Federal Reserve.
- Election uncertainty, particularly the potential for increased government deficits under a Trump presidency, is influencing long-term bond markets.
- Market analysts suggest that the rising term premiums could indicate expectations for greater deficit spending and higher yields for long-dated maturities.
- Inflation expectations over the next decade have also increased, contributing to the shift in bond market dynamics.
