Report published August 25, 2026
Reading the Markets USD: Treasury Interventions, Yield Pressures, and EUR/USD Outlook
Source and citation context
- Issuer
- Danske Bank
- Report date
- August 25, 2026
- Analysis as of
- Not stated in source
Authors / editors: Jens Nærvig Pedersen (Director), Antti Ilvonen (Associate)
Finvaulta summarizes Danske Bank's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
The US Treasury's surprise buyback announcement and political rhetoric highlight rising policy uncertainty without resolving structural deficit drivers. Danske Bank maintains a medium-term view of higher 10Y UST yields (5.00%) and a weaker EUR/USD (1.12 over 12M).
Key Takeaways
- 1.Treasury buybacks look increasingly like direct intervention, risking higher term premia across 6-12M and supporting a forecast of 10Y UST yields rising to 5.00%.
- 2.Relative macro and monetary policy fundamentals favour EUR/USD moving lower towards 1.12 on a 12M horizon, despite near-term tariff uncertainties and positioning unwinds.
- 3.Danske Bank expects 25bp Fed rate hikes in December and March, keeping rates at 4.00-4.25% through 2027, above current market pricing.
Table of Contents
- Little action, a lot of uncertainty
- Key views
- So 'peak deficit' is not here yet – but what's next for UST yields?
- The Fed, liquidity and the USD
Report data
Chart 1. Growth in US public spending largely explained by structural factors - Expected Growth in US Public Spending
| Metric | Estimate | Context |
|---|---|---|
| US GDP Growth | 2.0% | Forecasted US GDP growth for 2026, close to consensus of +2.2%. |
| EUR/USD 12M Forecast | 1.12 exchange_rate | Forecasted EUR/USD exchange rate over a 12-month horizon, below consensus and forward pricing at 1.18. |
| 10Y US Treasury Yield 12M Forecast | 5.0% | Forecasted 10Y UST yield in 12M, above forward pricing of 4.89%. |
| US Composite PMI | 56.0 index_points | US composite PMI reached 56.0 in August, the highest since March 2022. |
| US Treasury Cash Balance (TGA) | 950.0 USD_billions | Treasury cash balance at the Fed, matching earlier guidance for end-September target. |
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Authors / Editors
Reported Data Context
- US GDP Growth: 2.0 % (2026) · Source: Danske Bank
- EUR/USD 12M Forecast: 1.12 exchange_rate (12M) · Source: Danske Bank
- 10Y US Treasury Yield 12M Forecast: 5.0 % (12M) · Source: Danske Bank
- US Composite PMI: 56.0 index_points (August 2026)
- US Treasury Cash Balance (TGA): 950.0 USD_billions (Current (August 2026))