A collection of six factors presents conflicting evidence for ongoing higher rates, but on balance Husain thinks four support higher rates, two don’t, and the ayes will have it.

The four supporting factors start with the expanding U.S. fiscal budget. Between a budget that is 7% of GDP and the incoming Trump administration insisting on tax cuts, the chance of reducing the deficit is almost nonexistent. The Treasury Department will have to keep issuing large volumes of debt at the same time as other countries do the same. The flood of supply will force pricing competition and when bond prices drop as a result, yields will climb in inverse proportion.

Foreign interest in Treasurys has been falling, with China and Japan reducing holdings, reducing demand for the instruments. Reduced demand with increased supply means lower prices and higher yields. Third, the U.S. economy seems healthy with little apparent chance of a recession to cool things down.

Fourth, inflation could come back. Median projections at the Fed given inflation until 2027 to chill to 2.0%. Tax cuts could pump too much capital into the system, driving up prices; Trump’s tariffs, depending on the specifics, could act as a regressive tax and make many things more expensive than they are now.

On the other side of the argument, recent Fed bank regulation guidance might boost bank demand for Treasurys, taking up some of the demand slack, both supporting prices and controlling yields. And “rumblings about the Fed becoming less independent” on the part of Trump and others could encourage the central bank to slow or stop quantitative tightening, possibly restarting bond purchases.

“Even keeping in mind that it will take time for the new U.S. administration to implement any of its agenda, the preelection U.S. political uncertainty has cleared,” Husain wrote. “Longer‑term Treasury yields should be increasing, steepening the yield curve.”