JEMTF - Fixed Income Perspectives - Looking Ahead At Q2 2024: A Pause Before A Pivot
2024-04-10 12:00:00 ET
Summary
- Owners’ equivalent rent has been noisy over 1Q, however, other leading inflation indicators suggest there’s OER improvement to come in 2Q. This is supportive of a continued downward trend in inflation.
- Unemployment claims remain low by historical standards, but signs of softening and a meaningful upsurge in claims could challenge the market consensus of a soft landing and increase pricing for the magnitude of cuts.
- The fixed income market is expected to benefit from an attractive yield and a duration tailwind, with duration transitioning from a headwind to a tailwind.
Uncertainty surrounding the timing and depth of prospective rate cuts has risen and the resilience of the economy has been surprising. However, we believe evidence of lagged policy transmission will further reveal itself over the quarter ahead.