Executive Summary US: Moderating inflation paving a rate cut path, but the last mile remains bumpy The upside surprise on inflation and job market prints in 2024 anchored the trend of higher US treasury (UST) yields, with the 10-year UST climbing to this year’s high at 4.7% in late-April before settling at about 4.4%. Market expectations for a pivot to materialize this year remain unchanged, though the timeline is being pushed back to 4Q24. The last mile of disinflation could be bumpy, given ongoing resilience in both US growth and its labour market. Markets now price in for a 39bp rate cut in 2024 versus 28bps in late-April.
Ultimately, we think the Fed’s view is predicated on inflation being durable enough to...
