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Capital Economics: U.S. Short-Term Interest Rates Face Upward Risks
According to Jinshi Data, Kevin Thozet, a member of the Capital Economics Investment Committee, stated that U.S. short-term interest rates face upward risks. The market is overly confident about the Fed's interest rate cut outlook, having priced in at least two rate cuts this year.
Thozet pointed out that the resilience of the U.S. economy, policy uncertainty, and persistent inflationary pressures have led to overly high market expectations. He believes that the long-term U.S. Treasury yield trend is more balanced, and the current 4.300% yield on the 10-year Treasury is expected to fluctuate around 50 basis points above and below the current level.
Thozet pointed out that the resilience of the U.S. economy, policy uncertainty, and persistent inflationary pressures have led to overly high market expectations. He believes that the long-term U.S. Treasury yield trend is more balanced, and the current 4.300% yield on the 10-year Treasury is expected to fluctuate around 50 basis points above and below the current level.
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