Key Highlights

  • Kalshi traders assign a 56% chance the 10-year Treasury Yield ends 2026 at or above 4.75%, its level as of Monday.
  • Polymarket traders place 2-in-3 odds the 10-year yield crosses 4.8% at some point this year, a level not yet breached.
  • The Treasury may use its $1 trillion General Account to help fund expanded Buybacks of longer-dated government debt.
  • US national Debt crossed $40 trillion last week, adding further pressure on domestic bond yields amid a global sell-off.

Traders Bet Yields Will Resume Climbing

Treasury Secretary Scott Bessent is seeking to cap rising bond yields using a range of tools available to his department, but traders on prediction market platforms are skeptical those efforts will meaningfully lower borrowing costs. On Kalshi, speculators assign a 56% probability that the 10-year Treasury note yield will end 2026 at or above 4.75%, though only 27% odds that it finishes the year above 5%. As of midday trading Monday, the 10-year yield stood at about 4.7%. The Kalshi contracts, resolved using official Treasury data, saw relatively low Volume of just over $16,500 traded.

On Polymarket, traders place roughly 2-in-3 odds that the 10-year yield crosses 4.8% at some point during 2026, a level the yield has not yet breached even amid a recent bond sell-off. Polymarket's contracts are similarly resolved using official Treasury data.

Recent Volatility Reflects Inflation and Debt Concerns

Global bonds sold off last week as markets assessed the risk of higher inflation amid the unresolved US-Iran conflict. US National Debt also crossed $40 trillion last week, adding further pressure on domestic yields. In response to the sell-off, the Treasury Department announced it would double buybacks of US government debt in an effort to stabilize the bond market. Yields initially fell following the announcement before rising again in subsequent days.

On Monday, reports indicated the Treasury may consider using its $1 trillion General Account to help fund its expanded buyback program, according to senior officials, and yields declined again following that report. Prediction market traders, however, are betting that this latest decline will also prove temporary, with yields expected to resume climbing.

Conclusion

The gap between the Treasury's active efforts to cap long-term borrowing costs and prediction market traders' skepticism that those efforts will succeed highlights the scale of the challenge facing debt managers amid persistent inflation concerns and a rapidly growing national debt. Whether the Treasury's buyback program, potentially expanded through use of its General Account, can durably lower yields will likely depend on how upcoming inflation data and the broader fiscal trajectory evolve in the months ahead.