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Rates Spark: Yields remain vulnerable to a reversion higher ahead
US CPI came in at consensus, averting a scare that the number would turn out higher. Retails sales came in significantly weaker than expected, bringing down yields. There is a viable narrative of macro slowdown, but the inflation data remain too hot still. Market yields remain vulnerable to retracement higher until a material taming in inflation is shown. Better data helps 10y UST yield stay below 4.5% Latest US CPI inflation data don’t change this narrative, as it remains too hot for a Fed cut (despite the dramatic dip in rates and risk-on reaction). We agree that 0.3% month-on-month is a significant improvement, ... (full story)