Capital Economics: U.S. short-term interest rates face rising risks, and the market overestimates the prospect of rate cuts

Kevin Thozet, a member of the investment committee at Capital Economics, said in the report that short-term US interest rates were at risk of rising and the market was overconfident in the prospect of the Federal Reserve cutting interest rates. He pointed out that the US money market has already factored in at least two interest rate cuts this year, reflecting market expectations that the US economy and inflation will slow further. Thozet believes this expectation is too high, noting that the current 10-year Treasury yield at 4.3% is expected to fluctuate by about 50 basis points above and below current levels.