UBS strategists believe bond yields are likely to end the year lower due to several macroeconomic factors. US inflation, the Federal Reserve's monetary policy, and the growth in the US economy are among the key catalysts influencing bond yields. The softening housing market and slowing price trend in new rental leases suggest a further inflation slowdown. The Fed's next move is unlikely to be a rate hike, with expectations of policy easing and rate cuts. The pace of the Fed's balance sheet runoff is set to taper, reducing upward pressure on real rates. The US economy is showing signs of slowing, supporting the case for lower yields. UBS expects the yield on the 10-year US Treasury to fall toward 3.85% as the year progresses. [8eef08d0]