Morgan Stanley: The Federal Reserve (FED) will cut interest rates more than the market expects, pushing down Treasury yields.

Jin10 data reported on June 2 that Vishwanath Tirupattur and Serena Tang from Morgan Stanley Research pointed out that for U.S. Treasury investors, economic slowdown and expectations of interest rate cuts by the Federal Reserve (FED) are the most important factors. Morgan Stanley expects that under the influence of these factors, U.S. Treasury yields will decline, with the 10-year Treasury yield falling to 4.00% by the end of 2025 and slightly above 3.00% by the end of 2026. They stated, “We believe that the prospects for interest rate cuts by the Federal Reserve (FED) will exceed the current market pricing, which will drive Treasury yields lower, especially starting from early 2026.”