A Reuters poll suggests that U.S. long-term bond yields are likely to remain stable before rising this year, and massive bond issuance may make the Fed's balance sheet reduction "unfeasible."

A Reuters poll shows that long-term U.S. Treasury yields will remain stable in the short term, but will tend to rise later this year due to inflation and concerns about the Fed's independence; short-term yields, on the other hand, are expected to decline moderately due to bets on interest rate cuts. Meanwhile, nearly 60% of bond strategists (21 out of 37) believe that the massive issuance of Treasury bonds over the next few years to finance Trump's tax cuts and spending plans will make a significant reduction in the Fed's $6.6 trillion balance sheet unfeasible. Another Reuters poll shows that the Fed is expected to implement two interest rate cuts later this year, the first in June when Warsh takes over as Fed chairman. The yield on the interest rate-sensitive 2-year Treasury is expected to fall from the current 3.50% to 3.45% at the end of April and 3.38% at the end of July. The median forecast also shows that the benchmark 10-year Treasury yield is expected to rise to 4.29% in one year, higher than the 4.20% predicted last month. (Jinshi)