USD RATES OUTLOOK 2022

M onetary policy normalization is emerging as one of the major themes of the year, and the Fed's stated desire to normalize as quickly as possible leads us to modify our rate forecasts slightly. Our forecast for higher rates in 2022 remains unchanged, but the dynamics of the curve will depend on three themes that we review in this Strategy Report: The path of policy rates, which should normalize central bank expectations and steepen the short end of the curve The terminal rate, which is expected to be more volatile and will impact the curvature of the curve The normalization of the balance sheet, which should inject term premi a in to the curve, and thus bear steepen the long end. We expect the 10-year rate to reach 2% in the first quarter of this year due to high Treasury issuance, with a year-end level that could reach up to 2.40% in the event of an aggressive normalization of the Fed's balance sheet .