Treasury Market Bets Against Fed as Inflation Persists

United States 10-Year Nyheter

Treasury Market Bets Against Fed as Inflation Persists
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report suggests that a hefty market premium will endure, and perhaps rise further, in the near term — until there’s clearer evidence that the Federal Reserve has more traction in reaching its 2% target.

The bad news is that there’s room for debate. Looking at a broader range of inflation metrics suggests that an upward bias may be unfolding for pricing pressure, based on the average year-over-year trend for six measures of CPI. Whether it remains so is unclear, but for the moment it provides support for keeping an open mind on whether the recent round of sticky inflation is a temporary setback for disinflation or an early warning that reinflation is emerging.

The debate is whether the market premium could rise anew and perhaps reach, or even top, the previous peak set last year. That’s unlikely unless we see firmer evidence that inflation is reaccelerating. For now, that’s just a forecast compared with the more compelling view that inflation remains sticky at current levels.

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