Yield Outlook

Danske Bank has revised its outlook to expect rate hikes from the Fed and ECB due to persistent inflationary pressures and geopolitical risks. US policy rates are now expected to reach 4.00-4.25% by early 2027.

Key Takeaways

• 1.Global market expectations have shifted from rate cuts to rate hikes across major economies due to energy prices and demand-driven inflation.
• 2.The Fed is now expected to deliver two rate hikes by early 2027, bringing the policy rate to 4.00-4.25%.
• 3.The ECB is forecast to hike rates twice over the summer to 2.50% before cutting in spring 2027 as growth prospects deteriorate.

Table of Contents

• Rate hikes in the US
• Underlying inflationary pressure in the US – rate hikes in sight
• ECB: Weak growth figures loom but rate hikes in sight over the summer
• Central bank policy rates
• 10Y government bond yields
• 10Y swap rates
• Forecast: A two-sided risk picture
• Overview
• EUR forecast
• USD forecast
• GBP forecast
• SEK forecast
• DKK forecast
• NOK forecast

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