We still pencil in a downward trending profile for long UST yields over the coming year, though with a higher level expected on a 12M horizon compared to our September forecast.

We expect the 10Y UST yield to decline by 70 bps to 4.20% (previously 3.70%), as inflationary pressures soften and Fed initiates its cutting cycle. The upward revision is mainly an effect of a higher Term Premium, which we expect to prove stickier than the pricing of policy rates remaining ‘high forever’.