Long-term bond yields in the US are being affected by a number of factors, not just inflation concerns stemming from tensions in Iran and rising oil prices.
Market Watcher believe that inflation-adjusted "real yields" are having a greater impact in the US. This suggests that bond investors are concerned about both the burden of public debt, the wave of investment in artificial intelligence, and the likelihood that central banks, including the Fed, are leaning towards raising interest rates rather than cutting them.
ING, Goldman Sachs, and Barclays all suggest that the recent rise in some long-term yields may not be fully reversed, even if inflationary pressures from oil prices ease. If so, borrowing costs in the market could Peg high for a longer period.
This development could continue to put pressure on the government and the economy, even as the conflict over Iran subsides. It remains unclear how long the ultimate impact will last or at what level yields will stabilize.
