Core Viewpoint - The U.S. Treasury yield curve is expected to steepen in the coming months due to anticipated Federal Reserve rate cuts, which will lower short-term yields while longer-dated yields remain elevated [1][2]. Treasury Yield Trends - Recent data indicates a decline in Treasury yields, with the benchmark 10-year yield reaching a five-month low, influenced by a weaker labor market and a significant downward revision of job creation estimates [2][4]. - The current 10-year yield is at 4.08%, projected to rise to 4.20% in three months and 4.25% in a year, which is lower than previous forecasts [4]. Rate Cut Expectations - Interest rate futures are now pricing in three 25 basis point cuts from the Federal Reserve this year, an increase from earlier expectations of two cuts [3]. - Analysts predict that the 2-year Treasury yield, currently at 3.55%, will remain stable for six months before declining to 3.40% in a year, leading to a widening spread between 2- and 10-year yields [6]. Market Sentiment - A majority of analysts (85%) anticipate that the U.S. yield curve will steepen by year-end, reflecting a consensus on the direction of interest rates [6]. - The steepening of the yield curve is attributed to a rising term premium, driven by fiscal deficits, tariff uncertainties, and concerns regarding the Federal Reserve's independence [7].