T. Rowe Price has stated that US Treasury yields are likely to climb again before the world's largest economy slides into recession. Arif Husain, the firm's global head of fixed income, wrote in a report that yields will not truly peak unless a recession occurs. The Federal Reserve may keep raising rates until something breaks — essentially making a mistake by tightening policy too much. Husain put forward this view almost two years after he first suggested that the US 10-year Treasury yield could rise to 6%. At the time, that forecast was highly unusual, as traders broadly bet on the Fed cutting rates. As the Iran war intensified inflation concerns, the benchmark yield climbed to 5.36% earlier this year; afterward, a sharper selloff in tech stocks revived demand for government bonds, pulling the yield back to around 4.86%. Husain said the October rally in US Treasuries was driven by short covering rather than a renewed role for safe-haven demand. He wrote, "Or more precisely, I need to see more evidence before I believe that narrative, and not just during a period of seasonally low liquidity." Recommended reading: US inflation data will test the Treasury rally, with market expectations of a December rate hike probability exceeding 80%. Compared with fiscal issues, Husain sees inflation as the more pressing concern right now, and he said the Fed may have to raise rates above the level currently priced by the market. He also believes that as short-dated US Treasuries come under heavier selling pressure than longer-dated bonds, the yield curve may bear-flatten, and he said he would not be surprised if the US yield curve inverts in the "relatively near future." He said another factor that could prompt yields to peak would be concrete measures by developed-market governments demonstrating a commitment to fiscal discipline. Husain wrote, "French government bond yields rose rapidly in October (even to the point where some French corporate bond yields were below those of sovereign debt), and I am watching to see whether other countries learn from that."