What to Expect of EM Rates When Expecting US Rates to Stay Volatile?

Alpha Bites: Performance Summary of Trade Recommendations in FX and Rates – January 2022

United Kingdom: Inflation Without Benefits

Fed and US Corporates in Tussle over Inflation

Macro Data Dog Not Wagging FX Market Tail

Hawkish Rates Markets Ahead of Themselves

Early EM Rate Hikes Supporting EM Currencies

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Olivier Desbarres

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4X Global Research

4X Global Research was founded in 2017 to provide institutional and corporate clients with the substantive research, high-quality analysis and thoughtful insight on Emerging and G20 economies and financial markets they need to make informed and timely decisions and gain an edge in their investments.

FX & Rates

<ul>
<li>Consensus forecast is for another set of record-breaking data US CPI-inflation figures but they have been volatile since Spring 2021 and thus hard to predict. </li>
<li>US companies have rapidly increased prices, particularly for goods, because they have had to (rising input costs) and importantly because they have been able to. </li>
<li>Cutting inflation in 2022 will be challenging for Fed. We continue to think that short-end Treasury yields will rise further, with volatility spikes to remain a reasonably frequent occurrence.</li>
</ul>


Consensus forecast is for another set of record-breaking data US CPI-inflation figures but they have been volatile since Spring 2021 and thus hard to predict. 
US companies have rapidly increased prices, particularly for goods, because they have had to (rising input costs) and importantly because they have been able to. 
Cutting inflation in 2022 will be challenging for Fed. We continue to think that short-end Treasury yields will rise further, with volatility spikes to remain a reasonably frequent occurrence.


US: High Inflation, Rising Yields, Repeat

US Treasury (10 Yr Generic)

US: High Inflation, Rising Yields, Repeat