Inflation & Employment Indicators Are Mixed As Fed Meets

The latest batch of inflation and employment indicators suggests that the FOMC might adopt a neutral policy stance at next week's meeting rather than a tightening one as we have been expecting. That seemed to be the initial reaction in the US Treasury market, as 2- and 10-year yields edged lower on today's cooler-than-expected core CPI inflation news. We are sticking with our prediction that the FOMC will pivot toward a tightening stance rather than a neutral one next week, followed by a rate hike at the July FOMC meeting. We are also sticking with our June Swoon scenario as investors fret about the Fed, mega IPOs, AI uncertainties, and the war in the Middle East.

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