UST yield forecasts – Still a bearish bond backdrop

Global Research Rates Alert 17 September 2026

UST yield forecasts – Still a bearish bond backdrop • The recent Fed hike may help long-end UST yields to stabilise, but only in the near term • Short end is likely overpricing further tightening, but may push back (rather than price out) 2027 hikes • We raise our 2Y yield forecasts to 4.8% from 4.1% for end-2026 and 4.6% from 4.0% for end-Q3-2027 • Long-end UST negatives such as AI-related supply, fiscal concerns, Japanese repatriation risks persist • We raise our end-2026 10Y yield forecast to 5.1% (from 4.6%), see it reaching 5.5% in next 12 months

A 10Y yield of 5% may be a staging post, not a destination We have been bearish on the long end of the UST curve all year, but in recent weeks John Davies the benchmark 10Y yield has run ahead of the uptrend we had forecast – largely because of a more hawkish shift in the Fed outlook than we expected. Following the US Rates Strategist 25bps hike at the 16 September FOMC meeting, we raised our terminal Fed rate Standard Chartered Bank forecast by 50bps, with another hike expected in December (see FOMC – Moderate Eric Robertsen statement, hawkish presser). In line with this, and given our view that several long-end negative factors are still in play, we revise our yield forecasts higher across all time horizons (Figure 1). Global Head of Research Chief Strategist Going forward, the short end of the curve may be relatively protected by the overall Standard Chartered Bank (Singapore) Limited tightening already priced in – around 50bps more than we or the median FOMC dots project. But until the market is more confident that inflation will return to target, we expect rate-hike pricing to be pushed back rather than materially reduced. As a result, the 2Y yield may peak only after the expected December rate hike. We raise our 2Y yield forecasts to 4.8% from 4.1% for end-2026 and 4.6% from 4.0% for end-Q3-2027.

The recent curve flattening may remain largely in place through the December hike, but we think long-end yields will lead the curve steeper again in 2027. Key factors behind the bearish long-end bond backdrop – including AI-related investment and issuance, US fiscal concerns, and Japanese repatriation risks – remain either active or potential challenges. Even if the impact of oil prices on yields eventually fades, additional risk premium for inflation uncertainty may be required at the long end. Accordingly, we raise our 10Y UST yield forecasts to 5.1% (from 4.6%) for end-Q4- 2026, and we see scope for the yield to reach 5.5% over the next 12 months.

Figure 1: UST yield forecasts Yield, % (previous forecasts in brackets) Current Q3-26 Q4-26 Q1-27 Q2-27 Q3-27

Fed policy rate (upper bound) Y UST Y UST Y UST ) Source: Bloomberg, Standard Chartered Research

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Issuer of Report: Standard Chartered Bank Important disclosures and analyst certifications can be found in the Disclosures Appendix All rights reserved. Standard Chartered Bank 2026

Change Period Prior New Rates US 2Y bond yield (%) Q3-2026E 4.20 4.65 US 2Y bond yield (%) Q4-2026E 4.10 4.80 US 2Y bond yield (%) Q1-2027E 4.00 4.80 US 2Y bond yield (%) Q2-2027E 4.00 4.70 US 2Y bond yield (%) Q3-2027E 4.00 4.60 US 5Y bond yield (%) Q3-2026E 4.25 4.80 US 5Y bond yield (%) Q4-2026E 4.25 4.90 US 5Y bond yield (%) Q1-2027E 4.25 4.95 US 5Y bond yield (%) Q2-2027E 4.25 4.95 US 5Y bond yield (%) Q3-2027E 4.35 5.00 US 10Y bond yield (%) 2026E 4.60 5.10 US 10Y bond yield (%) 2027E 5.00 5.50 US 10Y bond yield (%) 2028E 5.00 5.50 US 10Y bond yield (%) Q3-2026E 4.50 5.00 US 10Y bond yield (%) Q4-2026E 4.60 5.10 US 10Y bond yield (%) Q1-2027E 4.70 5.20 US 10Y bond yield (%) Q2-2027E 4.70 5.30 US 10Y bond yield (%) Q3-2027E 4.85 5.50

Standard Chartered Global Research | 17 September 2026 2