The July CPI Report May Reveal Why Rates Are Headed Even Higher

The Fed’s lack of forward guidance is lifting nominal and real yields and steepening the yield curve, which is pressuring long-end rates. With July CPI expected to be modest, the key risk for risk assets is how markets reprice the long end after the print. Overall, the setup is mildly negative for equities/credit given rate and curve pressures.

Analysis

The Fed’s lack of forward guidance is lifting nominal and real yields and steepening the yield curve, which is pressuring long-end rates. With July CPI expected to be modest, the key risk for risk assets is how markets reprice the long end after the print. Overall, the setup is mildly negative for equities/credit given rate and curve pressures.