FPXE - Rates Spark: Trump Assassination Attempt Contributes To Steeper Curves

2024-07-16 08:00:00 ET

Summary

• The UST curve steepened on the back of Trump’s assassination attempt, which was deemed likely to increase his chances of a win.
• The spillovers from a Trump presidency to EUR rates are more muddled.
• Eurozone rates have been helped down by the recent improvement of US inflation data and the rebuilding of the Fed cutting narrative.

By Benjamin Schroeder | Padhraic Garvey, CFA | Michiel Tukker

Trump another cause for steeper curves

Markets see an increased chance of a Trump presidency after last weekend’s assassination attempt. Again, the move was most pronounced on the back end of the UST curve, whereby the 30Y point led the increase by around 5bp. The front end came down a bit, twisting the curve, and now prices in around 60bp of Federal Reserve cuts for this year....

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