When US Treasury yields soared, HSBC Holdings PLCThe fixed income team of the long Steven Major in well-known bonds has to rethink.

Major, head of HSBC's global fixed income research team, is unique in believing that ultra-low interest rates will remain for a long time, a position that has been largely proved correct for years. But in a report to clients on Friday, he admitted that the scale of the US fiscal stimulus was much larger than expected, coupled with the advent of an effective COVID-19 vaccine, subverting his view.

His team has raised its forecast for 10-year Treasury yields by 25 basis points to 1.0 per cent by the end of 2021. The yield is currently trading at around 1.48%.

"the bond market has taught us a lesson of humility, and we now apologize for our mistakes," Major and Lawrence Dyer, head of US interest rate strategy, wrote in the report. The cycle-driven trend has not changed the view that interest rates will fall for a longer time in the long run. But we need to be pragmatic because the risk in the left tail has been mitigated and the possibility of the most pessimistic scenario is reduced. "

A day ago, the yield on the 10-year US Treasury note broke through 1.6 per cent, the highest level in more than a year, and traders quickly advanced the expected time when the Fed was forced to tighten policy. Poor supply, potential unwinding of $50 billion positions and the disappearance of liquidity have further expanded the trend.

HSBC's long bond positions were already under pressure before Thursday's incident. Global yields rose across the board, forcing it to liquidate a long position in 30-year Treasuries last week.

"our basic scenario remains that there will be no long-term rise in inflation," the report said. "only when full employment returns and wages rise can we start to worry about a level of inflation that could test the Fed's average inflation target."