Treasury Counselor Predicts Yields Will Fall After Historic Surge
David Zervos predicts U.S. Treasury yields will decrease after reaching 24-year highs driven by AI spending and an energy shock from the war with Iran.
Counselor to the Treasury Secretary David Zervos stated that U.S. Treasury yields are likely to decrease after surging to 24-year highs. Speaking on CNBC, Zervos characterized current real yields as "really, really high by any historic standard" and argued that the trend is not a U.S.-specific phenomenon, noting similar movements in Japan, Italy, France, and Germany.
Zervos attributed the pressure on global real rates to two primary factors: increased corporate spending on artificial intelligence, which he termed "super intelligence," and an energy shock resulting from the U.S. war with Iran. This conflict has driven Brent crude prices up approximately 38%.
While the Federal Reserve recently raised interest rates for the first time in three years and may do so again in December, Zervos views the current yield impact as a short-term problem. He expects the situation to resolve once the energy crisis subsides.
