Analysis: Long-term Rise in U.S. Treasury Yields May Intensify Competition for Capital

Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, stated that the rise in long-term bond yields is intensifying competition for capital. At the current yield levels, some investors are inclined to shift toward safer investments by purchasing U.S. Treasury bonds. Ipek Ozkardeskaya pointed out that with an initial yield of approximately 5.3%, the potential returns over the next year exhibit an asymmetric profile. Coupon income can offset losses until yields rise to around 6.1%. If yields increase by 100 basis points, the total loss would be approximately 1.5%; however, if yields decrease by 100 basis points, the return, including coupon income, could approach 13%.