bullish
Yield Curve Normalisation on Rate Cut Anticipation
59 Views23 Jul 2024 16:48
SUMMARY
- The likelihood of imminent rate cuts has increased due to recent cooling in core CPI, driving anticipatory normalization of the yield curve.
- According to FedWatch, expected rate cuts totaling 100 basis points by March 2025 are driven by cooling inflation, improving economic data, and the increasing fiscal burden of U.S. debt.
- Historical data shows yield spread between 2Y and 10Y treasuries recovered just before and after rate cuts, signaling investor expectations front-running monetary easing.
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