Pimco CIO warns 10-year Treasury yield could reach 6% - report

US 10-year Treasury yields may reach 6% for the first time since 2000, according to Dan Ivascyn, Chief Investment Officer at bond fund manager Pimco, speaking to the Financial Times. The increasing prices of oil is driving inflation concerns and concerns about the US’s expanding public debt. The 10-year yield has increased by almost 120 basis points this year and is trading near 5.34%, its highest level since 2002.

Ivascyn predicts a potential sharp rise to 6% in the near term, driven by factors like hedge funds exiting their losing bond positions. "It is certainly possible, even from a short-term trading perspective, given that some of the activity we’ve seen in the last couple of weeks is tied to some negative technicals, some stop-out activity from the platform hedge funds and other levered investors.

You can certainly get there," he stated. A further increase in Treasury yields could have a negative impact on riskier assets like stocks and corporate bonds, potentially causing "some decent weakness in risk markets, both credit and equity," he added. The higher yields could lead to a further decline in global bond prices, as soaring energy costs fuel inflation and the AI boom boosts economic growth, leaving investors anticipating a prolonged period of higher interest rates.