Pimco warns: 10-year US Treasury yield may hit 6%, for the first time since 2000

Jitong Finance APP reports that Dan Ivascyn, Chief Investment Officer of bond fund management company PIMCO, stated that due to high oil prices intensifying inflation concerns and market unease over the continually expanding US public debt, the benchmark 10-year US Treasury yield may rise to 6% for the first time since 2000.

The US Treasury yield is the benchmark for global borrowing costs and asset prices. The 10-year US Treasury yield has risen nearly 120 basis points this year, and is currently just below last week’s peak of 5.34%, which was the highest level since 2002.

Ivascyn said on Friday that a sharp rise from the current level of 5.29% is “feasible” in the short term, citing factors such as hedge funds closing out losing bond positions.

“From a short-term trading perspective, this is certainly possible, because some of the activities we have seen in recent weeks are related to negative technical factors, and to stop-loss exits by platform hedge funds and other leveraged investors. You could certainly reach that level,” he said.

He also said that if US Treasury yields rise further, it might drag down risk assets such as stocks and corporate bonds; if yields climb to 5.5% or higher, it could lead to “significant weakness in risk markets like credit and equities.”

Global bonds have come under heavy selling pressure this year, with soaring energy costs pushing up inflation and the AI boom boosting economic growth, prompting investors to position for higher rates to persist for a longer period. Bond yields move inversely to prices, rising when prices fall. Global bond yields have surged, and during the three months to September, the 10-year US Treasury yield recorded its largest quarterly increase this century.