Deutsche Bank raises forecasts for short-term US Treasury bond yields.

Deutsche Bank economists Matthew Raskin, Steven Zang, and Andrew Fu wrote in their research report on Tuesday that following last week's Federal Open Market Committee meeting, the bank now expects the Federal Reserve to raise interest rates in September and December this year, each time by 25 basis points, bringing the federal funds rate to 4.1%. The report noted that this adjustment raised the bank's forecast for short-term U.S. bond yields - projecting the year-end 2-year U.S. bond yield to reach 4.3% (an increase of 35 basis points from previous forecasts). Given the bank's assumption that rate hikes will gradually be reversed by mid-2028, the impact on long bond yields is expected to be more limited. Deutsche Bank currently predicts a year-end 10-year U.S. bond yield of 4.8% (a 10-basis point increase from previous forecasts). Compared to the market's forward expectations, the bank's forecast for short-term yields is generally in line, but its forecast for the yield curve is steeper.