Apollo Global Management’s Zelter forecasts US Treasury yield between 4.25% and 5.5%

Jim Zelter, president of Apollo Global Management, expects the 10-year US Treasury yield to settle into a range of 4.25% to 5.5% for an extended period. That’s not the kind of forecast that sends anyone running for the exits, but it does represent a fundamental departure from the sub-3% world investors got comfortable with over the past decade. Why rates stay elevated Deglobalization tops the list. As supply chains reshore and trade patterns fragment, the cost of doing business globally rises. That feeds into persistent inflation, which in turn keeps the Federal Reserve from cutting rates as aggressively as markets might hope. Then there’s the fiscal picture. The US government continues to run substantial deficits, flooding the market with Treasury supply at a time when foreign buyers have become less reliable. And layered on top of all of that is the AI investment boom. Major tech companies are pouring capital into data centers, chips, and infrastructure at a pace that demands enormous financing. Zelter has noted that investment-grade corporate debt sales could actually outpace net US Treasury issuance. What this means for Apollo’s business Apollo’s credit origination business has...