LIVE MARKETS-WFII sees persistent inflation requiring more forceful Fed response

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WFII SEES PERSISTENT INFLATION REQUIRING MORE FORCEFUL FED RESPONSE

Wells Fargo Investment Institute expects persistent geopolitical risks and robust corporate technology spending to keep inflationary pressures elevated, leading the Federal Reserve to tighten monetary policy further.

The institute said persistent near-term inflation is likely to require a more forceful policy response to bring price pressures under control and now expects the Fed to raise its target federal funds rate range by a full percentage point from current levels, with hikes likely between this year and in spring 2027.

Reflecting that outlook, Wells Fargo forecasts the 10-year Treasury yield at 5.25%-5.75% and the 30-year yield at 5.50%-6.00% by the end of 2027.

Higher Fed rates, sticky inflation, geopolitical uncertainty, heavy Treasury issuance and fiscal deficit concerns are expected to keep pressure on long-term yields and term premiums, the institute said.

The benchmark U.S. 10-year Treasury yield was hovering around 5.25%, putting it on course for a sixth consecutive daily increase, the longest such run since a seven-day streak ended in October 2024.

(Joel Jose)

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