• Meanwhile in markets, the US Treasury market is now fully positioned for a hard landing of the US economy following yesterday’s US CPI shocker.
  • At the time of writing the 2y10y Treasury spread was at minus 25bps, down from around minus 10bps pre-CPI. A 100bps Fed rate hike this month is nearly fully priced in, with the August fed funds future implying a 92bps increase at the FOMC meeting in two weeks’ time.  Pricing for next week’s ECB has also inched up, with 30bps of hikes priced in. We stick with a 25bps for the sole reason that Lagarde & Co gave this moronic guidance – you should read the ECB’s guidance as a promise – of a 25bps hike for no good reason.


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