Webinar: The Good, the Bad and the Ugly for rates in 2027
The desk's thesis revolves around the potential for US 10-year Treasury yields to reach 6% by 2027 due to persistent inflation and expansive fiscal policies. Per the full note , the interplay of AI-driven productivity improvements and substantial government borrowing could create a sustained upward trajectory for global rates. Current consensus estimates for EUR/USD places it near 1.1253, with targets generally clustering around 1.15-1.18 for December 2026. However, with no high-impact events on the calendar in the near term, market reactions may largely depend on evolving inflation data and central bank commentary.
What the desk is arguing
The thesis posits that by 2027, the US 10-year Treasury may indeed hit 6%, a prospect driven by enduring inflation and elevated government borrowing, as suggested by the commentary from ING. With productivity gains from AI and fiscal deficits in play, the upward pressure on rates is likely to persist, potentially influenced by how Treasury Secretary Bessent navigates this landscape.
The challenges identified for Europe, particularly regarding inflation and heavy bond supply amid rising global real rates, suggest that the ECB's dovish stance could be put to the test. As noted, France's growing debt issue introduces an additional layer of complexity for euro sovereign markets, which could affect EUR/USD negatively if investor appetite wanes.
Where it sits in our coverage
Our current consensus for EUR/USD is 1.1253, with a Dec-26 range from 1.1000 to 1.2000. Specific firm targets show variance: - Commerzbank: 1.2200 - Rabobank: 1.1800 - Investec: 1.1700.
In comparing these projections, the desk's call aligns with the upper end of the projected ranges, hinting at a more bullish outlook in contrast to others like Investec who target 1.1455 by March 2026.
How other firms see it
Firms aligned with the bullish perspective include Commerzbank and Rabobank, suggesting a more optimistic trajectory for EUR/USD as the rate environment evolves. In contrast, HSBC and BofA present a more cautious stance, with lower targets indicating skepticism about immediate rate increases impacting this pair.
This dynamic plays out not only in EUR/USD but also intersects with potential movements in USD/JPY, as the Bank of Japan's policy decisions will be influenced by similar inflationary pressures and yield movements in the US.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Potential for US 10-year Treasury yields to reach 6% by 2027 due to inflation and fiscal policies.
- 02Heavy bond supply coupled with rising global rates may test fixed income investor appetite in Europe.
- 03Current EUR/USD consensus aligns with bullish sentiments, pointing to targets around 1.15-1.18.
- 04No significant calendar events present immediate catalysts for shifts in market sentiment.
Market implications
Traders should monitor the EUR/USD level closely, particularly around the 1.15 target, post any significant US inflation data that could shift sentiment around the Federal Reserve's rate outlook. Additionally, movements in USD/JPY will be critical as they reflect the broader rate themes at play.
Risks to this view
A significant reversal could occur if inflation data underwhelms or if central banks signal a more aggressive tightening path than anticipated, particularly from the ECB or the Fed. Additionally, any geopolitical developments affecting France's fiscal stability could further complicate euro positioning.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Morgan Stanley | Bullish | 1.2150 |
StoneX | Bearish | 1.1000 |
Standard Chartered | Bullish | 1.1800 |
Articles Webinar: The Good, the Bad and the Ugly for rates in 2027 Published 14:55 Rates Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Could the US 10-year Treasury hit 6% in 2027? And could markets be too relaxed about euro rates? AI-driven growth, stubborn inflation and extraordinary government borrowing could keep global rates under pressure, while France’s debt challenge adds another potential fault line in Europe.
Join ING experts to explore what could drive rates in 2027 Padhraic Garvey, CFA , Michiel Tukker and Benjamin Schroeder The US 10-year Treasury hitting 6% in 2027 is not as far-fetched as it sounds. AI and productivity, extraordinary fiscal deficits, and stubborn inflation could combine to keep global rates under upward pressure. But which force will ultimately dominate?
What could Treasury Secretary Bessent do if yields surge? And what if inflation proves stickier than market expectations suggest? Or is all that overblown, and we land in a less dramatic place?
We explore the forces that could drive each scenario. In the eurozone, the inflation shock may be changing rather than disappearing – is it, and if so, what are the implications? To what extent could second-round inflation pressures, heavy bond supply and rising global real rates complicate the outlook, even if the ECB turns more dovish?
Meanwhile, France’s growing debt challenge adds another source of uncertainty for euro sovereign markets. How bad can this get for bond markets and rates? Will bond supply finally test investor appetite?
Join ING experts as we explore the key scenarios for US and euro rates in 2027, and where the biggest risks and opportunities lie. Sign up here . Speakers Padhraic Garvey, Regional Head of Research, Americas Michiel Tukker, Senior UK & Eurozone Rates Strategist Benjamin Schroeder, Senior Rates Strategist Details Date: Wednesday, 4 November Time: 1400 GMT/1500 CET/0900 ET (change) The webinar will last 45 minutes, including a Q&A session at the end.
The event will take place online and the waiting room will open 60 minutes ahead of the scheduled start time. A joining link will be emailed following registration and you will receive a reminder email 10 minutes before the scheduled start time. Webinar Rates Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Padhraic Garvey, CFA Regional Head of Research, Americas Padhraic Garvey is the Regional Head of Research, Americas. He's based in New York.
Sources & References
How we cover this story
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