"Much of the stress that people feel doesn't come from having too much to do. It comes from not finishing what they've started."
Goodmorning!!
We had a stronger than expected US producer price inflation report on the heels of a strong US CPI data (6.40% yoy) , strong labor market data - under 200K weekly initial jobless claims data and lower housing starts and building permits data reflecting the weakness in the housing sector on higher interest rates.
The data comes on the back of a strong NFP print / Retail Sales / CPI data. Labor market strength and economic resilience has market reprice the terminal rate and second half pivot in Fed policy . The market now prices in a peak terminal rate of 5.30% and Dec 23 rate at 5.10%. Remember as early as start of January, market was pricing a peak terminal rate of 4.855%. Dec 2023 rate at 4.40%.
The peak terminal rate is now priced higher than Fed guided policy path of 5.10%. The Fed SEP central tendency shows the range for Fed fund rates to be 5.10% - 5.40%.
US Treasuries sold sharply with 2Y touching a high of 4.68% in close range now to the Nov 2022 cycle high was 4.88% while the 10Y touched a high of 3.89%.
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