Deutsche Bank Lifts Year-End 10-Year Treasury Yield Forecast to 4.70%, Sees Fed Rate Cuts Over

Deutsche Bank raised its 2026 year-end forecast for the benchmark 10-year U.S. Treasury yield to 4.70% from 4.45%, citing a shift in base-case expectations that the Federal Reserve under Chair Kevin Warsh has ended its easing cycle and faces rising risks of rate hikes. Strategists Matthew Raskin and Steven Zeng said in a note that the Fed will likely hold rates near the long-run neutral level, putting upward pressure on yields. The 10-year yield traded around 4.45% on Friday, May 29, 2026, up roughly 50 basis points since the Iran conflict escalated in February, which pushed energy prices higher and reshaped inflation expectations. Interest rate swaps now price about a 55% probability of a rate increase by year-end, though Deutsche Bank expects the Fed to remain on hold barring a major shift. Downside risks to the yield forecast include a sharp AI-driven labor market downturn, a cooling of the AI boom, or a durable peace deal with Iran that sinks oil prices. However, the strategists cautioned that any bond rally in the absence of improving economic fundamentals would likely be a selling opportunity for long-duration positions.