Societe Generale: The Federal Reserve will continue to cut interest rates, leading to lower short-term interest rates, and higher long-term interest rates due to tariffs and fiscal deficits

Socie ́ te ́ Ge ́ ne ́ rale forecasts that the 10-year Treasury yield will rise to 4.5% by the end of 2025, while the 2-year Treasury yield will fall to 3.5%. The reason is that the Federal Reserve will continue to cut interest rates, which will lower short-term interest rates, but will also increase the demand for long-term Treasury bonds by stimulating the economy and increasing the fiscal deficit, which will lead to higher long-term yields. In addition, the possibility that Trump's tariff plan will push up inflation expectations, coupled with the expected increase in the issuance of Treasury bonds by the US government to deal with the fiscal deficit, will push up yields.