BlueBay Expects Fed to Hold Rates Through 2026, Shift to Rate Cuts in 2027

According to BlueBay Chief Investment Officer Mark Dowding on May 8, the asset manager expects the Federal Reserve to maintain its policy stance throughout 2026. As inflation begins to decline in 2027, BlueBay is increasingly confident that the next move in U.S. interest rates will be a cut rather than a hike. Dowding stated that the U.S. 5-year Treasury yield is unlikely to sustain levels above 4%. Based on this outlook, BlueBay has shifted its medium-term U.S. Treasury Inflation-Protected Securities (TIPS) strategy to directly increase exposure to inflation-linked bonds.
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