Special Report: Interest Rate Outlook – May 2025
Potential Interest Rate Rise Prompts Investors to Recalibrate Strategies
Deficit surge and policy uncertainty amplify upward rate trajectory. Interest rate risk remains tilted to the upside as investors contend with a convergence of structural and policy-driven pressures. Chief among them are rising fiscal deficits and elevated uncertainty surrounding U.S. trade policy. Combined, the factors increase the likelihood of higher long-term interest rates, as investors demand greater yields to compensate for fiscal and policy risk.
- Analysis of projected deficit outcomes and required Treasury issuance amid weakening demand from key buyers.
- Evaluation of how heightened inflation risk may postpone the Federal Reserve’s rate cut timeline.
- Examination of the implications for both buyers and sellers in an elevated interest rate environment.