Singapore Bank: The Safe-Haven Status of US Treasuries is in Jeopardy, Highlighting the View of a Peaking Dollar

Mansoor Mohi-uddin, Chief Economist at the Bank of Singapore, stated in a research report that the downgrade of the U.S. credit rating last Friday has broad implications for its economic outlook. Firstly, the deteriorating fiscal situation in the U.S. reinforces the view that long-term U.S. Treasury yields will rise over time. The bank continues to forecast that the 10-year U.S. Treasury yield will reach 5.00% in the next 12 months. Secondly, the threat to the safe-haven status of U.S. Treasuries underscores the bank's view that the dollar has peaked. Lastly, the massive U.S. deficit and inflation may force the Federal Reserve to keep interest rates at higher levels for a longer period.