Citigroup, Goldman Sachs, and JPMorgan, among others, have raised their year-end forecasts for U.S. Treasury yields.

Last Friday, the U.S. consumer price index pushed the market-implied probability of a Fed rate hike to about 90%, after which rate strategists at Citi, Goldman Sachs, and JPMorgan all shifted to expecting that the Fed may raise rates this week. These institutions, along with TD Securities, joined a number of other Wall Street dealers in expecting the Fed to announce a rate hike on September 16. At the same time, several institutions also raised their forecasts for U.S. Treasury yields at year-end. Goldman Sachs strategists raised their year-end forecast for the 10-year Treasury yield from 4.40% to 4.75%, while TD Securities raised its from 4.25% to 4.75%. Strategists including GennadiyGoldberg of TD Securities said in a September 11 report that, given that the market has already priced in a Fed rate hike to a large extent, yields are not expected to rise sharply out of control because of the increase, but unless the economy shows signs of deterioration, yields should generally remain at a relatively high level through 2027. Strategists at BMO also said they have lowered their bullish forecast for 10-year U.S. Treasuries and expect a year-end yield of 4.6%, and that the possibility of a drop to 4.0% before year-end no longer exists. The bank still maintains a medium-term optimistic view on U.S. Treasuries as an asset class, but its near-term target is no longer as aggressive as before.