Opinion: Pricing in No Fed Rate Cut This Year Will Push 2Y U.S. Treasury Yields Higher
Analysts at BNP Paribas noted in a report that if the money market dismisses the expectation of a Federal Reserve rate cut this year, the yield on the U.S. two-year Treasury note is expected to rise in the coming months. The analysts stated: "By September 2025, we expect the market to remove the previously anticipated two rate cuts this year and postpone them to 2026." This will lead to a rise in the two-year Treasury yield before it falls back at the end of the year. Analysts expect the two-year Treasury yield to rise to 4.10% in the third quarter and fall back to 4.00% in the fourth quarter. They anticipate the Federal Reserve will implement four rate cuts in 2026. (Jin10)
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EIA expects Brent crude spot prices to remain at $100 per barrel for the rest of the year and raises the average price forecasts for this year and next.
The U.S. Energy Information Administration (EIA) has raised its forecast for average Brent crude oil prices in 2026 and 2027 to $97 and $86, respectively, reflecting pressures from global inventory declines, Middle East supply disruptions, and rising transportation costs. As oil production in the Middle East gradually recovers and global inventories rebound from low levels, the EIA expects the average spot price of Brent crude to fall to $87 per barrel in the second quarter of 2027, and further decline to $77 per barrel by the fourth quarter.
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