Barclays advises investors to plan for higher Treasury yields

On June 23, after the Federal Reserve shifted to a more hawkish stance last week, Barclays interest rate strategists advised clients to plan for higher Treasury yields. The Barclays team raised its target yields on U.S. debt for all maturities by about 35 basis points, in line with the bank's economists 'forecast adjustments. Barclays economists once predicted that the Fed would cut interest rates in 2027, but now believe that the Fed's policy will remain unchanged. In addition, Barclays strategists Anshul Pradhan and DemiHu wrote late last week that the Fed's abandonment of forward-looking guidance under Chairman Kevin Walsh has resulted in "risk premiums generated through channels of uncertainty should rise." The bank recommended an entry level of 4.15%, which is effectively a bet that the relevant interest rate will rise. Barclays 'latest yield forecast assumes that the Federal Reserve keeps interest rates unchanged. The bank is betting that the 10-year Treasury yield will reach 4.65% by mid-2027, about 15 basis points higher. They pointed out that in other scenarios, if the Fed raised interest rates by 100 basis points due to strong economic growth and sticky inflation, there was room for the 10-year Treasury yield to rise to about 4.9%.