Daily: Treasury pressure: The implications across markets

Key arguments

• Treasury intervention had a short-lived effect; long-end yields remain under structural pressure from fiscal deficits, energy prices, and AI capital demand.
• Short- and medium-duration bonds offer attractive yields and lower volatility compared to long-end bonds.
• Gold benefits from debt sustainability concerns and dollar weakness; target USD 5,400/oz in 12 months.
• Dollar weakness could ease financial conditions and support risk assets, but currency volatility warrants review of allocations.
• Equities remain on an upward trajectory; bond turbulence not a reason to reduce exposure, but diversification is key.

Corresponding source evidence

1. We expect gold to climb to USD 5,400/oz over the next 12 months. · 12 months
2. We think that yields in short- and medium-duration fixed income are attractive, while long-end bonds are likely to stay volatile until inflation and growth show clearer signs of moderating, or until fiscal concerns are meaningfully addressed. · near term
3. Looking forward, the dollar looks vulnerable to additional weakness, as the window for Federal Reserve hikes appears to be narrowing, and concerns around US debt sustainability tend to be dollar negative. · forward-looking