Standard Chartered Predicts 4.59% to 4% US Treasury Yield Drop

Standard Chartered Bank's Senior Investment Strategist, Foo Ken Yap, has forecasted that the US Federal Reserve will cut interest rates in the near future. This prediction comes despite widespread concerns about the US fiscal deficit and the potential for stagflation. Yap believes that the Fed will take this action to mitigate the impact on the bond market and to support overall economic growth. He anticipates that the US 10-year Treasury bond yield will decrease from its current level of 4.59% to a range of 4% to 4.25%.

Yap's optimistic outlook is based on the expectation of significant corporate investment and resilient earnings, which he believes will continue to support the market. Standard Chartered Bank also acknowledges the value of gold as a hedge against inflation and recession risks. This perspective contrasts with the views of Morgan Stanley, which has warned of potential stagflation and recession risks for the US economy in 2025. Morgan Stanley analysts have expressed concerns about the weakening job market, increased inflation pressure due to tariffs, and the overall economic uncertainties.

As economic uncertainties persist, investors are increasingly turning to alternative assets like gold and Bitcoin as safe havens. This trend is evident in the recent rally of Bitcoin, which achieved a new all-time high of $111,888 on May 22, 2025. The surge in Bitcoin's price reflects growing investor interest in assets perceived as hedges against economic instability. This shift in investor sentiment highlights the broader market's response to the potential economic challenges ahead, including the possibility of a Federal Reserve interest rate cut and the ongoing debate over tariffs and fiscal policy.