Citi's latest Global Rates Strategy report forecasts a bullish outlook for U.S. 10-year Treasury yields, projecting them to reach 4.1% by the end of 2025. This expectation is driven by anticipated fiscal policies from the incoming administration and their impact on the yield curve. "The magnitude and timing of new fiscal policies by the incoming administration, and the reaction of monetary policy to those changes will have a significant impact on the yield curve in 2025," Citi analysts note. The report suggests that the U.S. bond market will face increased coupon issuance in 2026 due to higher deficits, although no change in coupon issuance is expected for 2025. Additionally, Citi anticipates that the Federal Reserve will cut rates three times in 2025, with the Fed funds rate reaching a trough of 3.5%-3.75% by December. This scenario aligns with Citi's base case, which assumes the economy remains resilient without a prolonged recession.