- Advancing Treasury yields are indicating that the US CPI is likely to surprise on the upside.
- The upbeat US NFP has already bolstered the odds of status quo maintenance by the US Inflation.
- Fed’s Bullard sees interest rates at 4% by the end of CY2022.
The 10-year US Treasury yields are aiming to recapture the weekly high of 2.81% ahead of the release of the US Consumer Price Index (CPI). Bond buying is squeezing by the time as investors believe that the price pressures could surprise on the upside despite the downward consensus.
As per the preliminary estimates, a decent drop is expected in the plain-vanilla CPI by 40 basis points (bps) to 8.7%. Thanks to the oil prices, which remained vulnerable in July, and have trimmed inflation expectations. However, the US Nonfarm Payrolls (NFP) remained surprisingly upbeat than the expectations.
An addition of 528k jobs in July against the expectations of 250k has indicated that the overall demand is upbeat and investments are driving higher, which has led to a rise in employment generation. No doubt, the concept is indicating an elevation in price pressures. This may keep the odds of continuation of a hawkish stance intact.
The deviation between 10-year and two-year US Treasury yields is the widest since 2000 and therefore, recession fears are sky-rocketing. Fed's St. Louis President James Bullard has also warned for an upside surprise by the US CPI and is eyeing interest rates to 4% by the end of CY2022. The margin between current rates at 2.50-2.75% to 4% favors two more rate hikes: 50 bps and 75 bps, which are sufficient to place a recession situation in the US.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.