CIFC Says Fed May Be Losing Control of Long-Term Treasury Yields
Summary
- CIFC said long-term U.S. Treasury yields are being influenced more by external factors such as government borrowing and crude oil prices than by the Fed’s monetary policy.
- CIFC said heavy U.S. government borrowing, crude oil prices above $100 a barrel, AI infrastructure investment, and a global bond selloff are driving long-term Treasury yields higher.
- CIFC said long-term Treasury yields risk staying elevated despite additional Fed tightening, citing weak demand at a recent five-year Treasury auction.
Forecast Trend Report by Period
Long-term U.S. Treasury yields are being driven more by external factors such as government borrowing and crude oil prices than by the Federal Reserve’s monetary policy, according to an analysis from asset manager CIFC cited by Walter Bloomberg on Sept. 24.
CIFC said heavy U.S. government borrowing, crude oil prices above $100 a barrel, investment in artificial intelligence infrastructure and a global bond selloff are pushing long-term Treasury yields higher.
The asset manager said the Fed’s rate increase last week changed the shape of the yield curve but did not lower Treasury yields overall.
Weak demand at a recent auction of five-year U.S. Treasuries is also adding to upward pressure on yields. As a result, long-term Treasury yields risk remaining elevated even if the Fed tightens policy further.
