Watch out for the trend in US Treasury rates in the week that Jerome Powell’s Fed announces its rate decision, following US inflation data released last Friday.
The consumer price index in May confirmed what investors feared most: inflation in the United States has not peaked. The bad news added to the panic unleashed by Christine Lagarde’s ECB which, in addition to showing itself more hawkish on the interest rate front, did not provide any anti-spread shield, sending the equity and sovereign debt market of the euro area into a tailspin. , Italy first and foremost.
The fear of the arrival of a stagflation in the world has knocked out the markets, causing the rates of government bonds to soar.
In particular, 10-year US Treasury rates jumped up to a step from 3.2%, to 3.165%, and two-year rates, up to 3.065%, a record since 2008, in view of yet another hike in rates expected for this week, with the FOMC – the monetary policy arm of the Federal Reserve – meeting tomorrow June 13 to announce its rate decision on Wednesday June 14.
In early May, the Fed raised rates by 50 basis points, in the range of 0.75% to 1%.
In the minutes relating to the FOMC meeting, it later emerged that “most of the participants noted that further rate hikes of 50 basis points would be appropriate in the next two meetings”.
But after last Friday’s inflation figure, which indicated an 8.6% rate hike after + 8.3% in April, there are also some who are starting to bet on a 75bp squeeze. .