The 10-year Treasury yield will exceed 5.5% before falling below 3.5% in this cycle

Bond markets are pricing gradual normalization, but the path is asymmetric: the 10Y yield is more likely to spike above 5.5% than to fall below 3.5%.

Structural arguments for higher yields:
1. Fiscal dominance -- US debt/GDP exceeds 120%. CBO projects $2T+ annual deficits.
2. Inflation persistence -- Core PCE above 2.5% for 36 of last 48 months.
3. Foreign buyer retreat -- China and Japan reduced holdings by $380B since 2022.
4. Term premium normalization -- ACM model at +40bp, still below 1990-2007 avg of +150bp.

Bear case: A recession drives flight to safety, pushing yields sharply lower.

My position: Absent a severe recession, structural supply/demand dynamics push 10Y above 5.5% before any cyclical decline to 3.5%. The bond vigilantes are back.

Resolves based on the first of 5.5% or 3.5% touched by the 10Y Treasury yield.