Pouring cold water on rate cut expectations! PGIM, a giant asset management firm with $1.3 trillion in hand: The Fed may still raise interest rates, bearish on US bonds

US asset management giant PGIM Fixed Income stated that despite bond traders expecting the Fed to cut interest rates, the Fed may actually lean towards raising rates. The company continues to reduce its holdings of US Treasuries and believes that the market is too optimistic about policy rates. They anticipate that if core inflation continues to rise, the Fed will shift towards raising rates. While the market expects the Fed to cut rates, PGIM Fixed Income believes that this narrative must change. The company forecasts that the 10-year US Treasury yield will rise to 4.5%. They prefer high-grade corporate bonds and some sovereign bonds