Barclays Predicts US 30-Year Treasury Yields Could Hit 6%

Barclays Capital predicts that the US 30-year Treasury yield could climb to 6% if the United States experiences a sustained productivity boom. Anshul Pradhan, the head of US rates research at the firm, argues that the current market selloff fails to account for the risk of a permanent secular shift in productivity growth.

Pradhan suggests that investors are currently using a cyclical framework, assuming that elevated neutral rates are temporary and that the Federal Reserve System will eventually lower rates once inflation is controlled. He notes that markets "continue to assume that today’s elevated neutral rate will ultimately prove cyclical rather than secular," ignoring the possibility that these higher rates could become a long-term fixture of the economy.