The post Long-dated Treasuries face pressure as term premium rises appeared on BitcoinEthereumNews.com.

Markets overestimate cuts; long Treasuries remain vulnerable Markets appear to be overestimating how much room the federal reserve has to reduce rates this year, even as some easing is discussed. Against that backdrop, several large asset managers are shorting long-dated U.S. Treasuries, reflecting concern that longer maturities remain exposed to persistent inflation risks and elevated term premia. The divergence between policy-rate expectations and long-end yields is central. Front-end rates reflect the path of the fed funds rate, but the long end also prices fiscal deficits, supply of new bonds, and compensation for inflation uncertainty, factors that can keep long yields higher for longer. Why this matters: neutral rate, inflation stickiness, term premium A higher neutral rate would limit how far the Fed can safely cut without rekindling price pressures. Sticky components of inflation, especially in services, housing, and wages, mean progress may be uneven, reducing scope for aggressive easing despite cooling headline prints. Officials have signaled caution about easing prematurely. As reported by Bloomberg, Dallas Fed President Lorie Logan said the policy rate may already be close to neutral, adding, “What might be good news … wouldn’t necessarily allow the FOMC to cut rates soon.” Term premium, the extra yield investors demand to hold longer bonds, can rise when deficits swell and Treasury issuance increases, or when inflation uncertainty lingers. That premium can offset policy-rate trims, leaving 10- to 30-year yields elevated even as the Fed edges the front end lower. BingX: a trusted exchange delivering real advantages for traders at every level. If investors recalibrate to fewer or slower cuts, curve dynamics could re-steepen, with long-end yields remaining volatile as supply and inflation risks are repriced. In such a scenario, duration at the far end may underperform even if short rates decline modestly. Key signals include the trajectory of…

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Filed under: News - @ February 20, 2026 2:24 am