HSBC Securities economists predict the Federal Reserve will keep interest rates unchanged through 2026-2027. Oaktree Capital co-founder Howard Marks warns excessively low rates could encourage risky behavior, while UBS Asset Management's Kevin Zhao plans to sell 10-year Treasuries amid expected yield curve steepening.
HSBC Projects No Fed Rate Cuts Through 2027 HSBC forecasts the Fed will maintain its benchmark rate at 3.5%-3.75% through 2027, despite policymakers' recent 25-basis-point cut. U.S. economist Ryan Wang noted Chair Jerome Powell remained noncommittal about future easing during December's press conference, citing balanced risks between fiscal stimulus/AI investment and labor market cooling.
Oaktree's Marks: Further Cuts Counterproductive Howard Marks argues the Fed should remain passive unless facing extreme economic scenarios, criticizing proposals for deeper rate cuts. "Artificially cheap money creates moral hazard," he warned, suggesting investors become overly reliant on central bank bailouts.
UBS Plans Tactical Treasury Trades Kevin Zhao, head of active sovereign fixed income at UBS Asset Management, anticipates selling 10-year Treasuries below 4% yields while buying 2-years above 3.65%. He predicts the 2s-10s spread could widen to 100bps by late 2026 as markets price potential Fed hikes, reversing recent flattening.
OPEC Sees Balanced Oil Market in 2026 Contrary to industry forecasts of oversupply, OPEC maintains its projection for equilibrium at 43 million barrels/day production. This contrasts with Trafigura's "super surplus" warning and IEA's revised (though still record) surplus estimate.
Morgan Stanley's Euro Outlook Morgan Stanley strategists led by David Adams project EUR/USD could surge to 1.30 if ECB holds rates - an 11% gain from current levels and the highest since 2014. Their base case still expects 50bps of ECB cuts by mid-2026, but notes even with easing, euro could rise to 1.23 on Fed dovishness.
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