And that’s not just global temperatures!
Key points
- As the US economy continues to exhibit strength, hopes for an early rate cut dwindle.
- In our judgement, the Eurozone growth backdrop is weak and progress on reducing inflation may be slowing.
- We see strong underlying demand for high grade credit, and this means we’ll likely continue to see tight spreads.
- Looking ahead, the focus is on next week’s US CPI report, which has the scope to set the tone for the remainder of the month.
Global yields largely tracked sideways over the past week, following a marked increase in Treasury yields in the wake of the FOMC playing down hopes for a March rate cut and strong payrolls data. This reaffirmed the robust momentum that continues to be exhibited by the US economy.
In many respects, data has shown further strength since the December Fed meeting, which triggered a material easing in financial conditions. A slowing in activity remains likely as we progress through 2024, though for now, there is little to cause us to move from a long-held view that rate cuts are only likely to commence in the second half of this year.
