After two rate increases in 2022, we expect three Fed rate hikes in 2023 – Morgan Stanley
|Morgan Stanley (MS) joins the group of bulls expecting more and faster Fed rate hikes, per the latest note published Thursday night.
The US banker fetched their initial rate hike calls forward while saying, “We now expect the FOMC to begin raising interest rates in September next year, two quarters earlier than previously anticipated.”
Key quotes
Although the contours of our outlook for inflation and labor markets has not changed, aspects of the Fed’s reaction function may have.
In our outlook, we see the FOMC pausing on rate hikes in the third quarter of 2023 in order to initiate a balance sheet rundown.
Strategists lifted higher their 2022 forecast for the US two-year yield from 1.0% to 1.25%, to incorporate earlier rate hikes.
The strategists kept their 10-year yield forecast at 2.10% for the end of 2022. They forecast the yield to reach 1.75% in the first quarter, 1.90% in the second quarter, then 2% in the third quarter.
Read: US Consumer Price Index November Preview: Inflation is the new cause celebre
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.