2024-07-12 04:12:00 ET
Summary
- US CPI has settled down to rate-cut territory.
- First May, now June. Ahead July, and if that’s in the same vein, Treasuries can continue to anticipate cuts from the Fed.
- The ECB will unlikely commit to a September cut next week, but will also not push back against market pricing of a +80% probability.
By Padhraic Garvey, CFA | Benjamin Schroeder | Michiel Tukker
US CPI is in line for cutting for the second month running
We predicted lower yields and steeper curves for 2024 at end-2023, but we pivoted to a more bond-bearish stance early in 2024 as the US inflation data popped higher. We then switched back to a more bond bullish stance about a month ago, based off the subdued May inflation reading. Since then, we're back on the lower yields and steeper curve view....
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Rates Spark: Dip In U.S. Inflation Keeps Rates Looking Down