TD Securities: The Fed is expected to raise interest rates by 25 basis points in March and May

On February 24, the minutes of the February meeting indicated that the FOMC finalized plans for further rate hikes and wanted to maintain a restrictive policy stance for the foreseeable future. The Fed is expected to raise interest rates by 25 basis points each in March and May, and the terminal interest rate will hit the range of 5.00%-5.25%.

However, there is considerable upside risk to the final rate forecast, and the strength of the CPI and PCE and employment data due later could lead to further rate hikes by the Fed after the May meeting.

We continue to favor holdings of 10-year U.S. Treasuries, as the Fed is likely to keep policy restrictive for longer, leading to weaker economic growth later this year and into 2024.