Investors are increasingly preparing for U.S. Treasury yields to remain elevated for an extended period, amid concerns that incoming Federal Reserve Chair Kevin Warsh may struggle to contain inflationary pressures driven by surging oil prices during a prolonged Middle East conflict.
Long-dated Treasury yields, including the benchmark 10-year note, have climbed sharply in recent weeks as investors demand higher compensation for inflation risk linked to rising energy costs. Higher long-term yields typically translate into more expensive borrowing costs across the economy, affecting mortgages, corporate debt and leveraged loans.
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