Treasuries are forecast to decline during the first half of 2016, with yield increases moderated on speculation the Federal Reserve's monetary-policy normalization will prove more gradual than central bank officials foresee.

The median estimate of strategists and economists surveyed by Bloomberg shows the 10-year Treasury note yield rising to 2.55 percent in six months, from its 2.27 percent level Thursday. The yield on the two-year note, the shorter-maturity security more closely tied to the outlook for Fed policy, will rise to 1.33 percent by the end of June, which would be the highest since 2008, from 1.05 percent, forecasters say.

"You have a Fed that will slowly raise rates, with the market still taking the under with really how fast the Fed can lift them," said Scott Buchta, the head of fixed-income strategy at Brean Capital in New York and a nearly three-decade bond-market veteran. Traders "still see a lot of different headwinds from the tax and regulatory side, wage growth that really hasn't been there yet and slack still in the labor force."