Daily US

21 August 2026, 10:47 UTC Chief Investment Office GWM Investment Research

Treasury pressure: The implications across markets UBS House View - Daily US Ulrike Hoffmann-Burchardi, Chief Investment Officer Americas and Global Head of Equities, UBS Financial Services Inc. (UBS FS) Mark Haefele, Global Wealth Management Chief Investment Officer, UBS Switzerland AG Kiran Ganesh, Strategist, UBS Switzerland AG Jon Gordon, Strategist, UBS AG Hong Kong Branch Frederick Mellors, Strategist, UBS Switzerland AG Teck Leng Tan, CFA, Strategist, UBS AG Singapore Branch Giovanni Staunovo, Strategist, UBS Switzerland AG

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Thought of the day The US Treasury's bond market intervention this week has so far had a relatively short-lived effect on long-term borrowing costs. After an initial fall in yields, long-dated government bonds have resumed their sell-off, with yields on the 30-year Treasury climbing back to around 5.25%, about 5 basis points below their intra-week high. What to watch: 24 August • Singapore July inflation Meanwhile, the DXY dollar index is down almost 1% on the week, and gold prices have risen more than 4.3% to USD 4,560 per ounce.

Investors remain sensitive to the structural forces driving yields higher, including large fiscal deficits, elevated energy prices, and strong AI-related capital demand. The continued upward pressure on yields suggests that these concerns are currently outweighing policymakers' efforts to contain long-term borrowing costs.

At the same time, we would not dismiss the potential impact of further Treasury actions, particularly since policymakers have now signaled a greater willingness to intervene if market conditions deteriorate.

What are some of the implications for investors?

Stay focused on short- and medium-duration bonds. The volatility at the long end of the curve reinforces our preference for short- and

This report has been prepared by UBS Financial Services Inc. (UBS FS), UBS Switzerland AG, UBS AG Hong Kong Branch, UBS AG Singapore Branch. Please see important disclaimers and disclosures at the end of the document.

intermediate-maturity fixed income. 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. It remains to be seen what success policymakers will have in capping long-term yields, but we think structural forces are still likely to keep term premia elevated in the near term.

More room to run for gold. Gold prices have extended their monthly advance to 13%, as more investors seek alternatives to both duration risk and dollar exposure. Historically, concerns around debt sustainability and currency weakness have tended to support precious metals. While higher oil prices could keep rate expectations elevated in the near term, we think rising debt burdens and uncertainty over how governments will finance them should be supportive for gold. We expect gold to climb to USD 5,400/ oz over the next 12 months.

Dollar weakness could cushion risk assets. The intervention in the Treasury market has contributed to dollar weakness, likely reflecting a combination of fiscal concerns, profit-taking on long-USD positions, and uncertainty over what further Treasury actions could mean for markets. 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. The potential for higher currency volatility means that investors should review strategic currency allocations and ensure they are well-aligned with their personal situations.

Equities remain on an upward trajectory.…