KKR Raises US Treasury Yield Forecast Amid Persistent Inflation Concerns

Private equity firm KKR has revised its forecast for long-term US Treasury yields in response to the Federal Reserve's latest interest rate hike. The company now expects the yield on the 10-year US Treasury to reach 5.1% by year-end, up from its previous forecast of 5.0%. This increase is attributed to concerns about persistently high inflation, as expressed by Fed Chair Walsh.

KKR's revised forecast also suggests that interest rates will remain higher for longer, with the firm anticipating another rate hike in December and a further increase in March next year. According to KKR, the Federal Reserve will keep its benchmark interest rate at levels above previous expectations until early 2029, rather than just 2028.

Wall Street investment banks have also adjusted their forecasts following the Fed's decision. Bank of America Global Research is predicting two more rate hikes this year, sending the year-end rate to 4.25%-4.50%. Goldman Sachs expects an additional 25 basis points this year, while JPMorgan, Morgan Stanley, Nomura, HSBC, Barclays, Deutsche Bank, BNP Paribas, Macquarie, and UBS anticipate rates will remain at 4.00%-4.25% by year-end.