Yield curve between 2s/10s comes to closest level of becoming un-inverted in 9 months

Yield curve between 2s/10s comes to closest level of becoming un-inverted in 9 months on Thursday. The inverted yield curve between the U.S. 2 Year Treasury yield and the 10 year Treasury yield reached its closest level to becoming unverted in nine months. The 2s10s curve continues to steepen and is now 14 basis points away from un- inverting. The inversion took hold in July 2022.

U.S. GDP Growth Beats Expectations, But Fails To Dent The Market's Faith In Rate Cuts

U.S. GDP Growth Beats Expectations, But Fails To Dent The Market's Faith In Rate Cuts. GDP grew an annualised 2.8% in second-quarter 2024. Core PCE deflator rose 2.9% annualised versus the 2.7% expectation.

Rates Spark: Weak PMIs Help Build The Case For Rate Cuts

Weaker eurozone PMIs have helped markets price in two more ECB rate cuts for 2024. US manufacturing PMI slipped back below 50 and new home sales weakened, but services PMI edged higher. We continue to view the environment as prone to more risk-off, higher volatility and lower market rates.

Winter (Rate Cuts) Is Coming

The 2024 deficit estimate has increased by $400 billion, a 27% rise from their estimate five months ago. The U.S. Deficit for 2024 is expected to be $2.0 trillion, 7% of our Gross Domestic Product. The CBO forecasts no recession for the next decade. The IMF has warned of runaway spending in the United States.

Rates Spark: Why September Looks Like A Good Month For An ECB Rate Cut

Wolfe Research suggests the 2s/10s yield curve wants to breakout

Wolfe Research suggests the 2s/10s yield curve wants to breakout. The inversion between the U.S. 2 Year Treasury yield and the US10 Year yield remains inverted but looks like it "wants to breakout (steepen)" At the moment, the inversion sits at -26 basis points and is close to being un-inverted.

Rates Spark: Markets Are Still Digesting Biden's Departure

US Biden's withdrawal did not have a material impact on EUR rates. The biggest impact for Treasuries was a late-in-the-day rise in yields. Weaker growth data later this week should help the EUR curve steepening. The ECB's Survey of Monetary Analysts shows a well-anchored ECB terminal rate of 2.25%.

Weekly Report: what happened at SCHO last week (0715-0719)?

Has The Neutral Rate Of Interest Increased?

Rates Spark: Lagarde Clear About Not Committing To Cuts

Fed rate cuts aren’t imminent as labor market data comes with caveats - Vanguard

When Will The Fed Cut

When will the Fed cut rates? The Fed Funds rate is currently above T-Bill market rates. The Fed will cut its rate once the T- bill rate declines and stabilizes. Todd Sullivan sees evidence of a recession hedge by institutional investors for which they have shorted T-Bills. He says the Fed has a history of missing recession signals.

Rates Spark: ECB Unlikely To Satisfy Doves

European Central Bank is not likely to cut at this meeting and will likely refrain from committing to future cuts. Markets are already pricing in two more 25bp cuts for this year. In the US, the momentum is stronger towards a rate cut. In France, the political challenges continue to evolve but markets remain unmoved.

3 Bad Narratives That Are Dead (But Will Persist)

3 Bad Narratives That Are Dead (But Will Persist) Cullen Roche: Raising interest rates does not cause inflation. He says the Great Financial Crisis created some of the worst narratives in finance and economics. In 2008, the Fed cut rates to 0% and many expected this to create hyperinflation risk.

What The U.S. Election Could Mean For Deficits, Debt And The Yield Curve

Government borrowing and the national debt are barely mentioned in the US election campaign. The US government is borrowing the equivalent of 6% of GDP and national debt totals $35tr. Failure to change trajectory risks further debt downgrades, market volatility and higher borrowing costs. Fiscal sustainability of the US is being questioned.

Rates Spark: Pricing Of ECB Cuts Facing Limits

Market pricing for 2024 ECB cuts looks stretched. Markets are now pricing in 48bp of ECB cuts in 2024, just shy of two full 25bp cuts. Three UK rate cuts still on the table this year. The Fed’s Beige Book is scheduled for later today.

Economic Update - Q2 2024

Home Market Outlook Economy Analysis Economic Update - Q2 2024. The US economy is still growing but growth has slowed and signs of weakness are apparent. First quarter US real GDP figures came in at a 1.4% annual growth rate. Low savings rates and rising credit card delinquencies bear watching for a potential pullback in consumer spending. The Housing market has felt the effects of higher interest rates.

How Are Financial Markets Really Doing?

Why The Fed's Picking Up Speed Toward Rate Cuts

BofA survey reveals views on the economy, recession thoughts, and monetary policy