Firm US data has offset some of the recent declines in US Treasury and Bund yields and makes a 50bp cut in September less likely.
Firm US data has offsetsome of the recent declines in US Treasury and Bund yields and makes a 50bp cut in September less likely. Key upcoming US jobs data may tilt the balance in terms of cuts.For the European Central Bank, the need for aggressive cuts is even less probable and markets now see 65bp of cuts in 2024, which makes two more 25bp cuts the baseline. Fed cuts are coming, but is it 25bp or 50bp? The dip towards 3.8% for 10-yearUST yields proved short-lived.
That will likely continue to put a broader downward trend on rates, especially the front end. More near term though the question now centres on the size of the first cut. While the recent data has the market leaning towards 25bp, our economist would not rule out a larger 50bp cut just yet. Key will be the next jobs data early in September ahead of the Fed meeting.
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