Investors who started the year anticipating the Fed to deliver at least six rapid-fire rate cuts now expect just one – or perhaps even for rates to remain steady.
Signs that inflation is much more recalcitrant than expected is putting upward pressure on bond yields. (Yields rise as bond prices fall.) The yield on benchmark US 10-year bonds climbed to 4.7 per cent, the highest level since early November.
US Treasury Secretary Janet Yellen said she remained confident that US inflation could fall without a rise in the jobless rate. The biggest driver of inflation, she said, had been rising housing costs, adding she had “no doubt” these would fall over the next 12 months.
But few share her optimism. Indeed, a growing number of analysts point out that the huge imbalance in the US housing market, which has led to a sharp rise in both house prices and rents, shows few signs of easing.
And that will keep upward pressure on inflation,…
