This post is an excerpt from our June 11, 2024 market discussion video to VP clients. The full length, original video can be viewed here.
We review our US Fixed Income Dashboard ahead of the June Fed Meeting and inflation data.
Structurally: Fiscal deficits, demographics, geopolitical tensions, and pension funding ratios all bias yields higher.
Cyclically: Our US term-premium, fair value, and neutral-rate models indicate fixed income markets are fairly priced on a 6-12m forward basis.
Tactically: Our Fed Hiking Regime model has triggered, but Powell has made clear his reluctance to hike, with the risk-reward appearing limited when looking at STIR markets.
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