Societe Generale: The Fed will continue to cut interest rates, leading to lower short-term interest rates, while tariffs and fiscal deficits will push up long-term interest rates

Societe Generale predicts that by the end of 2025, the 10-year Treasury yield will rise to 4.5%, while the 2-year Treasury yield will fall to 3.5%. The reason is that the Fed will continue to cut interest rates, which will lower short-term interest rates, but will also stimulate the economy and increase fiscal deficits, which will increase demand for long-term Treasury bonds and lead to higher long-term yields. In addition, Trump's tariff plan may push up inflation expectations, and the US government is expected to increase the issuance of Treasury bonds in order to cope with the fiscal deficit, which will push up yields. (Jinshi)