The 10-year U.S. Treasury yield soars to 4.4%! Will it reappear in April 2025?

Recently, as geopolitical conflicts escalate and energy supplies become tight, concerns about stagflation have triggered volatility in global markets. The likelihood of the Federal Reserve cutting interest rates within this year has significantly decreased, even with some pricing in rate hikes. Meanwhile, the 10-year U.S. Treasury yield remains high, reaching up to 4.40%. However, some analysts believe the U.S. government will not continue to tolerate this situation.

Since the outbreak of the war on February 28, the U.S. 10-year Treasury yield has risen by about 45 basis points, which is very similar to the rapid surge in U.S. debt yields around April 2025, when Trump announced “reciprocal tariffs.” However, after the yield further broke through 4.60%, Trump officially announced a suspension of reciprocal tariffs on April 9, 2025.

Analysts point out that with the current U.S. 10-year Treasury yield at 4.40%, the range of 4.50% to 4.60% will once again become an insurmountable “red line.” The U.S. economy cannot withstand a 5% level in the 10-year Treasury yield.

Morgan Stanley believes that the market is not expecting the Fed to tighten policy but is instead pricing in large-scale fiscal stimulus in advance. In the post-pandemic era, investors may shift their expectations toward direct government “fiscal filling,” or QE, rather than rate cuts to boost the economy.

Watch for the convergence of risk premiums in high-volatility assets in emerging markets after U.S. Treasury yields decline:

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