Bank of America forecasts higher for longer Fed Funds rates, sees upside risks

<p>Bank of America on Fed Funds for next year:</p><ul><li>We revise our rates forecasts higher across the curve</li><li>now forecast 10y UST at 4.25% by end '24</li><li>Our forecasts are below market forwards but above consensus, especially by end '24</li><li>Our 2Y forecasts shade risks to a higher cutting trough than US economics baseline. This is due to risks of a higher nominal neutral rate, which the market currently prices. it also reflects risks that skew to a more resilient economy. </li></ul><p>BoA on the risks they see:</p><ul><li>skewed to the upside </li><li>We see risk to more growth momentum in rates market, stronger growth will mean higher rates vs our forecast. </li><li>We also see risks from elevated UST supply which could keep long end US rates higher &amp; the curve steeper vs our forecasts.</li><li> Downside risks could stem from a sharper US economic slowdown or another round of bank stress</li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.