Rates Spark: Soothing CPI Data And Extrapolated De-Escalation

2025-05-14 07:31:00 ET

Summary

• Despite cooler CPI data, trade de-escalation points to higher long-end rates.
• The Fed may have room to act earlier and thus less drastically overall, while the general headwind to growth is moderating.
• In Europe, Dutch pension reforms could have clarity soon as the delayed vote on a potential rule change should be rescheduled to next week.

Despite cooler CPI data, trade de-escalation points to higher long-end rates

Longer rates remain subject to upward pressure as trade tensions are de-escalating, while the front end got some reprieve as the US CPI data soothes imminent inflation fears. 10y UST yields have further tested towards the 4.5% upper end of their range, while 10y Bunds came close to 2.7%, which is still some distance from the 2.9% peak of March....

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