Markets
US Treasuries tested sell-off lows on Friday after January producer price inflation delivered the third upset of the week when it comes to price developments. CPI inflation and import/export prices earlier on the week showed signs of sticky (services) inflation as well. The trio triggered a new big repricing in Fed policy rate expectations. The preferred market scenario for a first 25 bps rate cut switched from May to June after having been pushed from March to May earlier on the month following a stellar payrolls report. By the time of the May Fed policy meeting, the US central bank will only have two additional CPI reports (3 PCE deflators) at its disposal which is almost impossible to bring the longed-for confirmation that inflation is sustainably on a path towards the 2% inflation goal. More and more…
