PanAgora Global Fixed Income Director and Chief Investment Officer Arif Husain said that the market is currently experiencing a "calm before the storm" as investors digest the various factors affecting US Treasury yields after the US election and before the presidential inauguration. With the Fed's rate cuts setting a floor for short-term yields, it is still expected that mid-term and long-term bond yields will rise, causing the yield curve to steepen. The new US government brings new information and uncertainties, as well as more variables. The US fiscal expansion continues, and the economy remains robust. According to the data from the US Congressional Budget Office, the US budget deficit as a percentage of GDP is expected to be 7.0% for the fiscal year 2024. With the Trump administration's promise of tax cuts, the chances of a significant decrease in the budget deficit are slim. The US Treasury will need to continue issuing a large amount of new debt to finance the budget deficit, pushing up yields. Furthermore, as governments worldwide take similar actions to compete for market funds, global yields may rise. Traditionally, the market analyzes the US fiscal situation as a separate case. However, with global sovereign debt at its highest level since the 1980s due to the aftermath of the pandemic, governments' balance sheets are under immense pressure, leading to potential significant deviations in this analysis approach. The Fed seems to have successfully achieved an economic soft landing. Based on current economic trends, the likelihood of a recession in the short term is minimal. The Fed appears to be committed to easing monetary policy, even though markets and the Fed have quickly lowered expectations for future rate cuts in the next 12 months, which may reflect an expected rebound in inflation. Foreign demand for US bonds is declining, and inflation may return. There are signs that foreign investors' demand for US Treasury bonds is weakening. As of September 2024, Japan's holdings of US Treasury bonds have decreased from a high of $1.3 trillion in 2021 to around $1.1 trillion. With the Bank of Japan preparing to tighten monetary policy again in 2025, more Japanese investors may withdraw from the US Treasury market and invest in the domestic market. China's holdings of US Treasury bonds have also steadily declined from around $1.1 trillion in 2021 to approximately $770 billion in September 2024. The volatility of US Treasury bonds has surpassed that of other high-quality sovereign bonds of developed markets and even some individual emerging market sovereign bonds, which may lead some investors to adopt a wait-and-see approach. While recent inflation has eased slightly, many policy measures appear to be driving inflation and economic growth. Therefore, it will be crucial to observe where the "red line" lies in actual policy implementation, as there is often a noticeable time lag between policy changes and their subsequent economic reactions. As widely agreed in the market, tariff policies may often push inflation higher. Among all the campaign promises of the new US government, the expected adjustments to immigration policies may be the most significant factor driving inflation.