J.P.Morgan Adjust Year-End Tsy Calls

J.P.Morgan have made changes to their interest rate forecasts on the back of Thursday’s revision to their Fed call. They have raised their 2-Year Tsy forecasts by 35bp to 2.35% by end ‘22, while they made more modest revisions to their 10-Year target, which was lifted by 15bp to 2.50%. They noted that their forecast implies that 10-Year yields will remain below the 2.75-2.80% range where they traded in 2018 when Fed funds were at 2% and, as such, their forecasts imply a very flat yield curve by year-end. They suggest that “besides declining neutral Fed policy rates, the Fed’s large share of Treasuries outstanding and firming pension demand all justify a flatter curve from lower yield levels”