Three Forces Shape Long-End Rates into 2027: AI Gains, Fiscal Risk, War Inflation

ING identifies AI productivity ('good'), elevated fiscal deficits ('bad'), and geopolitical inflation pressure ('ugly') as the three drivers of long-end rate trajectories through mid-2027, when inflation is expected to ease. The framework matters for duration positioning and curve steepness bets, though current markets remain fixated on US election outcomes and their fiscal/policy implications rather than multi-year structural themes.