HSBC has raised its US government bond yield forecasts, expecting the 2-year and 10-year Treasury yields to reach 4.20% and 4.65% respectively by the end of 2026. The bank stated that this move is due to a more hawkish outlook from the Federal Reserve, now anticipating a nearly 50% chance of a 25 basis point rate hike in September, although it still expects rates to remain unchanged. HSBC also predicted that persistent fiscal deficits will drive a long-term steepening of the yield curve.