PIMCO Investment Director Dan Ivascyn said that U.S. Treasury yields may still have room to rise further, and the Federal Reserve could raise rates one or two more times before this tightening cycle ends.
He expects the Fed to keep rates unchanged later this month, but sees scope for one or two additional hikes, and believes the long end of the yield curve is sufficient to absorb further Fed tightening, as those expectations have already been priced in by the market, though rate-sensitive sectors such as residential and commercial real estate will still face risks.
He anticipates that Fed Chairman Warsh will take an open-minded approach to inflation, believing his stance will lean more toward wait-and-see and keeping the policy rate unchanged, but the Federal Open Market Committee may limit his room for policy maneuvers, and he expects the committee to favor tighter policy until the inflation picture becomes clearer.
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