UBS: U.S.-Iran Deal Eases Pressure on Fed Rate Hikes; Next Move Seen as 2027 Rate Cut

Huoxing Finance reports that on June 15, Leslie Falconio, Head of Taxable Fixed Income Strategies at UBS Global Wealth Management, stated that following the announcement of an agreement between the U.S. and Iran, oil prices declined, prompting a strengthening in the U.S. Treasury market and easing pressure on the Federal Reserve to raise rates this year. Falconio said: “Even before the ceasefire agreement was reached, oil prices had already begun to fall, yet the two-year Treasury yield continued to rise because the market had priced in nearly a 100% probability of a rate hike by December.” “Now, with oil prices declining, the market is gradually withdrawing these rate hike expectations, causing the two-year Treasury yield to start falling.” New Fed Chair Walsh will preside over her first interest rate decision this week. Amid此前 the surge in oil prices that reignited inflationary pressures, voices within the FOMC supporting a rate hike this year have grown stronger. Falconio expects the FOMC to formally remove its accommodative stance at this week’s meeting, making the policy outlook more hawkish. However, she still believes the Fed’s next move will be a rate cut, likely in 2027. (Jin10)