2024-07-23 07:45:00 ET
Summary
- We continue to grapple with the implications of Biden’s exit on markets.
- There have been some jumpy movements, but the big picture has not changed much. Weaker growth data later this week should help the EUR curve do some steepening.
- The ECB’s Survey of Monetary Analysts shows a well-anchored ECB terminal rate (2.25%), as reflected in market pricing.
By Padhraic Garvey, CFA | Michiel Tukker | Benjamin Schroeder
Biden exit reaction is complex
The path ahead for the Democratic ticket remains uncertain, but Vice President Kamala Harris remains the presumptive nominee unless negated by events. The biggest impact reaction for Treasuries was a late-in-the-day rise in yields, coinciding with a tech-heavy risk-on theme. The front end of the curve has taken a mild hit too, pulling lower the probability of a rate cut in September. A September rate cut is still practically discounted, but an element of doubt has been introduced, as some believe the Fed might prefer not to add to the rise in volatility seen in the past few weeks. We don't find much substance to this notion....
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Rates Spark: Markets Are Still Digesting Biden's Departure