Michael Shumacher of Wells Fargo thinks 10-year bond yields go down from here.  He doesn’t think the U.S. Government can “tolerate” 6-7% on the 10-year.

Mr. Shumacher thinks that foreign and domestic bond buyers would put a stop to any rise in long-term interest rates, and the 10-year will actually be around 3.50% by year end. He does not ascribe to the higher-for-longer view.

But will they absorb the new supply at lower rates?  The CBO projects a $1.4T budget deficit for 2023 and a little higher in 2024.  And the Fed is no longer a buyer. Foreign entities currently own about $8T of U.S. Treasury Debt.  The rest is held internally by pension funds, investors and banks.  Additionally, U.S. National debt is about 35% of the total world national debt of $87T, so new issuance by the U.S. is outsized proportionally to the world.