Ian Lyngen, head of US rates strategy at BMO Capital Markets, expects the Federal Reserve to raise rates by 25 basis points this month, followed by additional hikes at the October and December meetings. These three hikes combined would push the federal funds rate target range back to 4.25% to 4.5%. Josh Hirt, senior US economist at Vanguard, also considers three rate hikes a "fairly reasonable starting point," but notes that the number of hikes could range from one to six.

Analysts also point out that the optimism behind the AI spending boom and the insurance industry's large holdings in private credit are two potential risk exposures in a high-interest rate environment. If the 10-year US Treasury yield reaches 5%, the market could face a new wave of selling pressure.