$180 billion asset management giant T. Rowe Price: Fiscal conditions are deteriorating, and U.S. Treasury yields will soon reach 6%

As Trump's second term approaches, the $180 billion American asset management giant T. Rowe Price has recently raised its expectations for U.S. Treasury yields and warned that the tax cuts Trump is about to implement will lead to a persistent U.S. budget deficit, while potential tariffs and immigration policies will continue to exert price pressure. On December 17, Bloomberg reported that T. Rowe Price's Chief Investment Officer for Fixed Income, Arif Husain, wrote in his latest report that the yield on the U.S. 10-year Treasury bond could reach 5% in the first quarter of 2025, and then further climb, potentially hitting 6% for the first time in over twenty years. He also emphasized that the U.S. fiscal situation will further deteriorate, and Trump's policy proposals will fuel inflation to remain high. However, he also stated: "The transition period in American politics is an opportunity to prepare for the upward movement of long-term U.S. Treasury yields and a steeper yield curve." Multiple Institutions Hold Pessimistic Views on U.S. Treasuries On Tuesday, the yield on the 10-year U.S. Treasury bond remained largely unchanged at 4.423%. Earlier this year, this yield had briefly risen to 4.74%, and the last time it hit 6% was in 2000. With U.S. Treasury yields remaining high, multiple institutions expect further increases. ING Groep NV predicts that next year the yield on the 10-year U.S. Treasury bond could rise to between 5% and 5.5%, while Franklin Templeton and JP Morgan Asset Management expect it to be around 5%. Clearly, Husain's expectation of 6% for U.S. Treasuries is more pessimistic than theirs. Currently, the market is also waiting for the Federal Reserve's policy statement on Wednesday to assess how much more room there is for rate cuts after the anticipated 25 basis point cut this week. "Creditors" Selling Off, High Volatility... The Outlook for U.S. Treasuries Grows Dimmer Husain stated that the declining global demand for U.S. Treasuries also indicates a bleak outlook for the country's debt. Previously, data released by the U.S. Treasury showed that Japan, the largest overseas holder of U.S. sovereign debt, sold off $61.9 billion of U.S. Treasuries in the third quarter, a record high. Another "major creditor" also sold off $51.3 billion of U.S. Treasuries during the same period, marking the second-highest sell-off in history. Nick Twidale, Chief Analyst at AT Global Markets, stated, "We are confirming everything we have started to price in; Trump's potential inflationary policies and tariffs will only lead Japan and other countries to sell more U.S. Treasuries." Moreover, in the context of the U.S. economic recovery, some investors' concerns about the Federal Reserve potentially reducing the rate cut magnitude further increase the upward pressure on U.S. Treasury yields. Husain also noted that the "likelihood of a U.S. economic recession is very low," further diminishing the attractiveness of U.S. Treasuries As a veteran with nearly thirty years of market experience, Husain also stated: "It is rumored that U.S. Treasury bonds are more volatile than other high-quality developed market government bonds, even exceeding some emerging market sovereign bonds, which may deter some investors."