The 10-year Treasury continues to be a lynchpin of longer-term lending, including CRE mortgages. But its near-term future is uncertain. What will happen depends on macroeconomic factors, investor sentiment, and White House actions, and there are two schools of thought.
The most fundamental issue is the term premium. That’s the amount of interest of a Treasury bond yield over and above the federal funds rate, set by the Federal Reserve, that investors want to see before buying.
“Recently it’s been rising quickly,” Rebecca Patterson, an economist and former chief investment strategist at Bridgewater Associates, wrote in The New York Times. That typically means investors expect long-term growth and higher future interest rates to control it.
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