Live Updates > Live Update Details
2026-09-17 10:42:09
Liu Yu, chief economist at Industrial Securities, pointed out that the Federal Reserve is highly likely to raise interest rates by at least another 25 basis points. At the latest September FOMC meeting, the Fed announced an increase of 25 basis points in the target range for the federal funds rate, raising it to 3.75%-4.0%. Liu believes that after the start of this rate hike cycle, in order to cool down the overheated economy and suppress high inflation, there is still at least 25 basis points of room for further rate hikes. Looking at the Fed's dot plot, there will be another 25 basis point rate hike before the end of this year, which is largely in line with current market expectations. Whether there will be further rate hikes in 2027 depends mainly on the performance of subsequent US economic growth and inflation data. If capital expenditure in the AI field can maintain a high growth rate, regardless of whether final productivity improves, the possibility of a Fed rate hike in 2027 is not low, and the final interest rate of this rate hike cycle will most likely fall within the 4%-5% range. Due to the pressure of debt size, the probability of this round of rate hikes ultimately reaching above 5% is relatively low, unless a significant improvement in US productivity can be confirmed. From an asset performance perspective, the Federal Reserve's continued interest rate hikes can enhance the credibility of its policies, which is conducive to stabilizing long-term US Treasury yields in the short term and pushing the yield curve towards flattening. Looking at the longer term, the rise in long-term US Treasury yields is mainly driven by three factors: rising oil prices, high fiscal deficits, and expansion of AI capital expenditures. Oil prices may turn downwards in the next 1-6 months, but the fiscal deficit and AI capital expenditures are structural factors, and the possibility of a reversal in the short term is very low. There is still a risk that long-term US Treasury yields will continue to rise, and the 10-year US Treasury yield may subsequently rise to the 5.2%-5.5% range.
