US Treasuries bear flattened as markets priced in more aggressive Fed tightening, with December hike expectations rising to 28bp following Governor Waller's comments on a potential 50bp catch-up hike.
Stronger US CPI and Governor Waller's comment about a possible 'catch up' 50bp hike lifted December hike pricing to about 28bp from 25bp and 2027 pricing to 45bp from 34bp. That repricing pressured front-end yields sharply higher, so the 2-year yield is likely to rise further near term. The main counterweight is that markets are waiting for other FOMC members to confirm Waller's view.
Treasuries bear flattened as markets priced more Fed tightening after stronger CPI and Waller's 50bp 'catch up' hike comment. December hike pricing rose to around 28bp from 25bp and 2027 to 45bp from 34bp, lifting yields; the 10-year yield should rise, though flattening means the front end bears the brunt. Further Fedspeak could reverse some pricing.
Higher expected Fed tightening after stronger CPI and Waller's 50bp catch-up comment supports the dollar: December hike pricing rose to about 28bp from 25bp and 2027 to 45bp from 34bp. Higher US rate expectations tend to lift USD. The risk is that other FOMC members may not confirm Waller, which could fade the repricing.
US Treasuries experienced sharp bear flattening as markets reacted to stronger CPI data and hawkish comments from Governor Waller. Investors increased December hike pricing to 28bp from 25bp, while 2027 hike expectations rose to 45bp from 34bp, pressuring front-end yields higher.
Stronger US CPI and Governor Waller's comment about a possible 'catch up' 50bp hike raised December hike pricing to around 28bp from 25bp and 2027 pricing to 45bp from 34bp.
Markets are waiting for further Fedspeak to confirm whether other FOMC members agree with Waller.
Markets priced more Fed hikes after stronger CPI and Waller's 50bp catch-up comment; December pricing rose to around 28bp from 25bp.
Front-end yields moved sharply higher, while the article describes a bear flattening, so short-dated yields rose more than long-dated yields.
Markets raised expected Fed tightening, with December hike pricing at around 28bp and 2027 at 45bp, which tends to support USD.
Further Fedspeak may show other FOMC members do not agree with Waller, reducing hike pricing.