US 10‑year Treasury yields have slipped below the 5 % threshold, yet 3R Investment Management’s founder Neeraj Seth warns that the long‑end curve is poised for a rebound within the next three to six months.
The dip is largely a result of unwinding short positions that reached a peak last month, a trend that 3R describes as temporary.
Seth points to the persistently high fiscal deficit, stubborn inflation and sustained demand for capital as the main forces that could push long‑term yields higher again.
Political uncertainty adds another layer of risk; the U.S. mid‑term elections and the outcome of Israel’s elections could trigger volatility, potentially supporting rates.
Oil prices, currently hovering around $115 a barrel, may ease if geopolitical tensions subside, while a slowdown in AI capital expenditure could be a welcome development for Indian investors.
Looking ahead, market participants should keep an eye on fiscal policy announcements and election results, as these will shape the trajectory of long‑end yields over the next half‑year.