Deutsche Bank
May 21, 2026
Wisdom of Crowds and Markets Agree: Rate Hike Risks are Rising
Macro ThematicRates Govt BondsMacro Economic IndicatorsOther
Both household surveys and Treasury market indicators (specifically the 2Y yield spread over Fed Funds) are signaling that risks for a Federal Reserve rate hike are rising over the next year.
Key Takeaways
- 1.Both household surveys and financial market indicators are now signaling increased risks of Federal Reserve interest rate hikes over the next twelve months.
- 2.The spread between 2-year Treasury yields and the effective fed funds rate has risen to ~45bps, which has historically been a strong leading indicator of future rate changes.
- 3.Current market pricing is already reflecting nearly 20bps of rate increases for the remainder of the year.
Table of Contents
- US Economic Notes
- Analyst Certification
- Important Disclosures
- Additional Information
- International Production Locations
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Authors
Matthew Luzzetti, Ph.D.Brett RyanJustin WeidnerAmy Yang
Securities
2-year TreasuryFed funds rate
Themes
Convergence of consumer and market expectationsTreasury yield spread as a leading indicator
Regions
North AmericaUnited States