Capital Economics analyst John Higgins says higher-than-expected inflation
prints could put further near-term pressure on US Treasury yields. On Tuesday
the 2-year yield rose more than the 10-year, reflecting firmer market bets on
tighter Fed policy. At the long end, gains have been driven mainly by higher
real yields and term premium rather than inflation risk. Capital Economics says
if the recent equity rebound does not persist the yield move could reverse, and
warns an AI-driven market bust would likely produce a rebound weaker than the
internet bubble because the Fed is unlikely to cut as aggressively.
