Citigroup, Goldman Sachs, and JPMorgan Chase Raise Year-End U.S. Treasury Yield Forecasts

According to a report by Golden Finance, on September 15, following last Friday's release of the U.S. Consumer Price Index, which pushed the market-implied probability of a Federal Reserve rate hike to approximately 90%, rate strategists at Citigroup, Goldman Sachs, and JPMorgan Chase have all shifted to expecting a rate hike by the Federal Reserve this week. These institutions, along with TD Securities, have joined other Wall Street dealers in predicting that the Federal Reserve will announce a rate hike on September 16. Meanwhile, several institutions have also raised their forecasts for year-end U.S. Treasury yields. Goldman Sachs strategists increased their year-end forecast for the 10-year Treasury yield from 4.40% to 4.75%, while TD Securities raised theirs from 4.25% to 4.75%. In a report dated September 11, TD Securities strategists, including Gennadiy Goldberg, stated that given the market has already significantly priced in expectations for a Federal Reserve rate hike, yields are unlikely to rise uncontrollably due to the hike. However, unless there are signs of economic deterioration, yields are expected to remain elevated overall through 2027. Strategists at the Bank of Montreal also noted that they have lowered their bullish expectations for the 10-year Treasury yield, forecasting a year-end yield of 4.6%, with no possibility of dipping to 4.0% before year-end. The bank maintains a medium-term optimistic outlook for U.S. Treasuries as an asset class, but its near-term targets are less aggressive than before.