Steven Blitz, Managing Director of Global Macro and Strategy at TS Lombard, stated that the US 10-year Treasury yield will rise to 8% in the coming years, given the massive supply of global government debt and insufficient political will to suppress inflation.

Blitz wrote in a report that the current mix of monetary and fiscal policy will drive inflation and yields higher with each successive economic cycle.

He noted that this situation has occurred before, and it will not end unless there is political willingness to decisively bring down inflation, even at the cost of short-term economic disruption; he also said that such a shift may not occur in the US until as late as 2029.

Blitz wrote that ultimately, the 10-year Treasury yield is expected to climb to 8%, but before that, the trajectory is bound to experience repeated ups and downs; the 10-year Treasury yield was around 5.23% on Wednesday, close to its highest level since 2007.

Along the way, it will shatter some assumptions the market has taken for granted: first, that inflation will eventually return to 2%, and second, that being long stocks and bonds will always deliver returns.