US Rates: ING's Triple Whammy for Treasuries in 2027

TL;DR: ING expects the 10-year Treasury yield to keep rising into the first quarter of 2027, toward 5.25% and possibly 5.50%, according to its November 4 analysis. It then sees yields falling to 4.50% to 4.75% later in 2027 as inflation eases. The drivers are AI-driven productivity, large deficits and sticky inflation.

ING's global economics team published "US rates and a triple whammy of obstacles to overcome" on November 4, 2026. The note argues that the 10-year Treasury yield stays under upward pressure into the first quarter of 2027.

The bank then sees the direction reversing. Later in 2027, ING expects inflation to ease and the market to start pricing Federal Reserve rate cuts again, which would take the 10-year toward 4.50% to 4.75%. ING also says investors should not jump to that too early, because upward pressure on inflation is still very much in focus. This is one bank's forecast, not a certainty.

What are the three obstacles?

According to ING, AI-driven productivity growth, elevated fiscal deficits and sticky inflation can push the 10-year back toward 5.25% and as high as 5.5%.

It's an odd mix, because AI is the one that sounds like good news. Stronger growth means the economy can bear a higher return on safe assets, so the yield rises.

ING also flags a wrinkle for 2027. The risk is that AI-related issuance pressure begins to eclipse AI-driven productivity growth. There was significant issuance throughout 2026, and more supply of bonds pushes yields up regardless of growth. The bank's summary of the mechanism is short: where the real yield goes, the nominal Treasury yield goes.

Period	ING's view of the 10-year yield	What drives it
Early 2027	About 5.25%, possibly 5.50%	AI productivity, deficits, sticky inflation
Later in 2027	4.50% to 4.75%	Inflation eases, market prices Fed cuts again

The table shows a two-stage call. The near-term pressure is up, and the relief depends on inflation falling first.

Where does the Federal Reserve fit in?

ING's call is about long yields, and the Federal Reserve sets only the short end of the curve. The central bank still matters, because ING says the decline later in 2027 begins when the market starts to re-discount Federal Reserve rate cuts. Until inflation gives investors a reason to expect those cuts, ING sees no relief at the long end.

Deficits are the second driver you can check yourself, since they sit in public budget data. We covered the scale of that borrowing in our piece on the US deficit nearing $2 trillion.

What does a higher 10-year yield mean for private deals?

A higher Treasury yield raises the bar every illiquid investment has to clear. If a risk-free Treasury yield climbs toward the 5.25% ING forecasts, a private fund quoting a similar projected return is asking you to take lockup, fees and sponsor risk for nothing extra. Projected returns are targets until they become realized ones.

Floating-rate debt is a separate question. It resets off short-term rates, not the 10-year yield, so a syndication financed that way is more exposed to the Fed's path than to ING's long-yield call. Borrowers pay more when short rates rise, and lenders earn more. You need to know which side of that loan you sit on.

Two of our pieces show how rates reach private income. BDC non-accrual rates in Q2 2026 show what borrower stress looks like at lenders, and the triple net lease REIT guide covers rate risk in a listed real estate structure.

What does ING's call depend on?

Inflation prints come first, since ING's later-2027 relief depends on inflation easing. If either one surprises, the forecast moves with it.

Common mistakes

The first mistake is treating a bank's forecast as a fact. ING's 5.25% to 5.50% range is a view, and ING itself describes the later decline as conditional on inflation easing.

The second is comparing a private deal's projected return to yesterday's Treasury yield. Use today's yield for the same holding period, after fees.

The third is assuming the later-2027 decline is already here. It isn't, and ING warns against jumping to it too early.

FAQ

Where does ING expect the 10-year Treasury yield to go? ING expects upward pressure into the first quarter of 2027, toward about 5.25% and possibly 5.50%. It then expects a fall toward 4.50% to 4.75% later in 2027 as inflation eases and the market prices Fed cuts again.

What are the three obstacles ING names? ING points to AI-driven productivity growth, elevated fiscal deficits and sticky inflation. Together it says they can push the 10-year back toward 5.25%, and potentially as high as 5.5%.

Why does the Fed matter for a 10-year yield forecast? The Fed sets short-term rates, not the 10-year yield. ING says the later-2027 decline starts when the market begins pricing Federal Reserve rate cuts again, which depends on inflation easing first.

Does this change what a private deal has to earn? It can. A higher Treasury yield raises the return worth demanding for lockup and fees. Compare any projected return to the current Treasury yield for the same duration, after costs.

Before your next private-deal review, subtract today's 10-year Treasury yield from the sponsor's projected return after fees, and if you'd like this kind of rate-to-deal read each week, sign up for the free AIN briefing.

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