Market professionals surveyed by Bankrate expect Treasury yields to decline over the next 12 months as inflation continues to moderate and the market looks to possible rate cuts in 2024. Bankrate’s Fourth-Quarter Market Mavens survey shows that investment experts are predicting 10-year yields government bonds will fall to 3.98 percent per year from now on, compared to 4.24 percent at the end of the research period on December 11, 2023.
Most survey respondents see interest rates lower in a year, with forecasts ranging from 3.25 percent to 5.0 percent.
The survey period ended just before the Fed’s December meeting, where it left rates unchanged and signaled that it is likely done with rate hikes. The ten-year yield fell to 4.02 percent immediately after the announcement and traded below 4 percent in the days that followed.
“2024 brings no shortage of potentially challenging factors that will be associated with the nagging ‘wall of worry’, including whether interest rates and yields match hopes, geopolitical risks and, let’s not forget, the US election,” says Mark Hamrick, Bankrate’s senior economic analyst. “A recent Bankrate survey found that nearly 9 in 10 Americans said addressing the economy will be a major deciding factor in whether they cast their vote for president.”
Forecasts and analysis:
This article is one in a series discussing the results of Bankrate’s Market Mavens Survey for the fourth quarter of 2023:
- Survey: Investment experts see interest rates on ten-year government bonds falling in the coming year
- Survey: Stocks will soar 5.5% higher in 2024, professionals say
- Poll: Here’s How Experts Think Fed Policy Will Affect Stocks in 2024
Ten-year yields are expected to fall in the coming year, analysts say
Ten-year Treasury yields have been below 5 percent for most of the past two decades, hitting record lows during the COVID-19 pandemic, when the Fed sharply cut rates to support the economy. At its low point, the 10-year yield reached about 0.50 percent in August 2020, but started to rise as the economy recovered. Interest rates rose steadily in 2023 as the Fed aggressively raised rates to combat inflation.
Investment professionals surveyed by Bankrate expect the 10-year yield to reach 3.98 percent at the end of 2024, down from the 4.36 percent level they expected at the end of September 2024, as indicated in the previous survey.
The survey’s estimates generally track the general trend in interest rates, with forecasts ranging from 2.19 percent in the Q4 2023 survey to 4.36 percent in the Q3 2023 survey.
Analysts look ahead to possible interest rate cuts in 2024
With the Fed signaling that it is likely done with rate hikes as inflation has fallen, some market analysts are looking ahead to possible rate cuts in 2024.
Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, expects a recession in the first half of 2024, prompting the Fed to respond.
“Next year, in the second half, we will see only two to three interest rate cuts, and that should contribute to both an economic and market recovery,” says Samana.
Sonu Varghese, global macro strategist at Carson Group, also sees rate cuts next year. “We expect the FOMC to cut rates three to four times in 2024, reflecting lower inflation but trending economic growth,” he says.
Briefing.com chief market analyst Patrick O’Hare says it is important to focus not only on whether rates will be cut next year, but also on the reason for those cuts.
“The best outcome would be a rate cut, as inflation comes down to target while the economy is still growing,” O’Hare said. “Cutting rates because the economy is in a recession would be a different story for the stock market, because recessions are bad for profits. Our current expectation is that the Fed will cut rates by 50 basis points in 2024.”
Methodology
Bankrate’s Q4 2023 survey of stock market professionals was conducted Dec. 1-11 via an online survey. Survey requests were sent by email to potential respondents across the country, and responses were submitted voluntarily through a website. The responses included: Kenneth Chavis IV, CFP, senior wealth advisor, Versant Capital Management; Sameer Samana, senior global market strategist, Wells Fargo Investment Institute; Patrick J. O’Hare, Chief Market Analyst, Briefing.com; Dec Mullarkey, Managing Director, SLC Management; Kenneth Tower, CEO, Chief Investment Strategist, Quantitative Analysis Service; Clark A. Kendall, CFA, president, Kendall Capital; Sonu Varghese, Ph.D., global macro strategist, Carson Group; Michael K. Farr, president and CEO, Farr, Miller & Washington; Brad McMillan, head of investments, Commonwealth Financial Network; Sam Stovall, chief investment strategist, CFRA Research; Kim Forrest, chief investment officer/founder, Bokeh Capital Partners; Chuck Carlson, CFA, CEO, Horizon Investment Services.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making any investment decision. In addition, investors are advised that the past performance of investment products does not guarantee future price increases.
