Bank of America raises US 10-year yield forecast on fiscal concerns

Investing.com - Bank of America has revised its forecast for the US 10-year Treasury yield to 5.0% by year-end, up from its previous estimate of 4.5%, according to a research note released Thursday.

The bank also raised its 2-year yield forecast to 5.0% from 4.5%, slightly above current forward rates. The revisions come as markets face multiple risks including energy concerns related to Iran, fiscal challenges, trade tensions, and artificial intelligence uncertainties ahead of US midterm elections.

Bank of America maintained its EUR-USD forecasts at 1.15 for end-2026 and 1.20 for end-2027, despite making modest revisions to its near-term profile. The bank also adjusted its forecasts for currencies in the Antipodean and Nordic regions.

The firm raised its second-half 2026 Brent crude forecast to $95 per barrel from $83 per barrel, citing ongoing geopolitical tensions as the most likely scenario through year-end. The bank expects continued inventory draws to support an average 2027 Brent price near $80 per barrel, with no changes to its metals forecasts.

Bank of America expects USD/CNY to reach 6.6 by year-end, driven by export proceeds conversion, an undervalued yuan, and increasing pressure from G7 countries to address trade imbalances. Brazil's general election is scheduled for Sunday, October 4.

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