Pimco warns that 10-year US Treasury yields may rise to 6%, the first time since 2000

The Zhitong Finance App learned that the yield on the benchmark 10-year US Treasury could rise to 6% for the first time since 2000 as high oil prices heighten concerns about inflation and the market is uneasy about America's growing public debt.

US Treasury yields are the benchmark for global borrowing costs and asset prices. The 10-year US Treasury yield has risen by nearly 120 basis points this year, and is currently slightly below the 5.34% hit last week, which is the highest level since 2002.

Ivashin said on Friday that a sharp rise from the current level of 5.29% is “doable” in the short term, and mentioned factors such as hedge funds closing loss-making bond positions.

“From a short-term trading perspective, this is certainly possible because some of the activity we've seen over the past few weeks is related to negative technical factors and stop-loss exit activities of platform-based hedge funds and other leveraged investors. Of course you could reach that level,” he said.

He also said that if the yield on US bonds rises further, it may drag down risky assets such as stocks and corporate bonds; if it rises to 5.5% or higher, it may cause “risk markets such as credit and stocks to weaken significantly.”

Global bonds faced heavy selling pressure this year. Soaring energy costs boosted inflation, and the AI boom boosted economic growth, prompting investors to maintain higher levels of interest rates for a longer period of time. Bond yields go against prices; yields rise when prices fall. Global bond yields soared. In the three months ending September, 10-year US bond yields recorded their biggest quarterly increase in the century.