The recent uptick in long-end UST yields reflects rising term premium, while risk-neutral rate expectations have remained stable.

Tightening financial conditions tilt the balance of growth risks to the downside, we still expect consumption and inflation to cool towards the winter.

Unfavourable supply-demand dynamics are likely to persist into Q4, but we still see improving demand driving yields lower, with 12M 10y forecast at 3.70%, though risk is tilted to the upside.