Group 1 - UBS Asset Management's Kevin Zhao predicts that the Federal Reserve will have to shift towards interest rate hikes next year due to economic growth recovery, leading to a significant widening of U.S. Treasury yield spreads [1] - Zhao's prediction contrasts sharply with the market's general expectation, which anticipates further rate cuts from the Fed, including two more cuts this year and five by the end of 2026 [1] - Zhao believes that if economic growth rebounds, unemployment decreases, and inflation remains high, the rationale for the Fed to raise rates will become evident by mid-next year [1] Group 2 - The yield spread between two-year and ten-year U.S. Treasury bonds has narrowed to about 50 basis points, with Zhao waiting for it to narrow to approximately 40 basis points before initiating a trade to profit from a steepening yield curve [2] - The Global Dynamic Bond Fund managed by Zhao has achieved a return of over 7% this year, outperforming 89% of its peers [2]

Core Viewpoint - The yield on the 20-year U.S. Treasury bond briefly fell below that of the 30-year bond, marking the largest yield spread since 2021 [1] Group 1: Yield Movements - The 20-year U.S. Treasury yield increased by approximately 7 basis points to 5.0035% [1] - The 30-year U.S. Treasury yield rose by 6.8 basis points to 4.9997% [1] Group 2: Market Concerns - Ongoing negotiations in Congress regarding tax cuts have raised concerns among traders [1] - There are fears that President Trump's policies may exacerbate the already high deficit issue, increasing pressure on long-term U.S. Treasuries [1]