UBS: US-Iran agreement reduces pressure on Fed to raise rates; next step is a rate cut in 2027.

According to ME News, on June 16 (UTC+8), Leslie Falconio, Head of Taxable Fixed Income Strategy at UBS Global Wealth Management, stated that oil prices fell after the US and Iran announced their agreement, and the US Treasury market subsequently strengthened, easing pressure on the Federal Reserve to raise interest rates this year. Falconio said, "Even before the ceasefire agreement, oil prices had already begun to fall, and the two-year Treasury yield was still rising because the market had priced in a near 100% probability of a rate hike in December." "Now, oil prices are falling, and the market is gradually withdrawing these rate hike expectations. Therefore, the two-year Treasury yield is starting to fall." Newly appointed Federal Reserve Chairman Warsh will preside over his first interest rate decision this week. Against the backdrop of soaring oil prices reigniting inflationary pressures, voices within the FOMC supporting a rate hike this year are growing. Falconio stated that she expects the FOMC to formally remove its dovish bias at this week's meeting, making the policy outlook more hawkish. However, she still believes the Fed's next move will be a rate cut, and that it will happen in 2027. (Source: ME)