With the US federal debt forecast to rise significantly relative to GDP in the coming years, there could be structural pressure for the term premium to continue to rise, Jussi Hiljanen of SEB Research said in a note.
The term premium refers to the additional return that investors demand to hold long-term bonds instead of short-term bonds.
“Over time, this will result in bond yields, especially with longer maturities, rising more than short rate expectations alone would justify,” said the chief US and eurozone rates strategist.
