WFII sees persistent inflation requiring more forceful Fed response
WFC•Wells Fargo Investment Institute expects the Fed to raise its target federal funds rate range by a full percentage point from current levels, with hikes likely between this year and spring 2027. It forecasts 10-year Treasury yields of 5.25%-5.75% and 30-year yields of 5.50%-6.00% by the end of 2027.
1. Fed rate outlook
Wells Fargo Investment Institute expects persistent geopolitical risks and robust corporate technology spending to keep inflationary pressures elevated, requiring a more forceful Fed response. It expects the Fed to raise its target federal funds rate range by a full percentage point from current levels, with increases likely between this year and spring 2027.
2. Treasury yield forecasts
The institute forecasts 10-year Treasury yields of 5.25%-5.75% and 30-year yields of 5.50%-6.00% by the end of 2027. It said higher Fed rates, sticky inflation, geopolitical uncertainty, heavy Treasury issuance and fiscal deficit concerns are expected to pressure long-term yields and term premiums.
