Deutsche Bank raises its forecast for short-term US Treasury yields.

Deutsche Bank economists Matthew Raskin, Steven Zang, and Andrew Fu wrote in a research report on Tuesday that following last week's Federal Open Market Committee meeting, the bank now expects the Fed 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 revision raised the bank's forecast for short-term U.S. bond yields - expecting the year-end 2-year U.S. bond yield to reach 4.3%. Given the bank's assumption that rate hikes will be gradually rolled back by mid-2028, the impact on long bond yields is expected to be limited. Deutsche Bank currently expects the year-end 10-year U.S. bond yield to be 4.8%. Compared to the market's forward expectations, the bank's forecast for short-term yields is generally consistent, but its forecast for the yield curve is steeper.