Bonds Reeling After Inflation Shocker
Abstract
core CPI surged to 0.6% vs forecasts calling for 0.3% and a previous reading of 0.2%. This is the sort of surge that very few economists predicted (obviously... the median was 0. 3% after all) This is just the classic Fed accommodation trade. In other words, hotter CPI instantly upgraded the odds of higher rate hikes with a small increase to next week's outlook (10bps) and larger increases to the hikes by the end of the year.
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