Repricing of rates while other asset classes focus strictly on soft landing: The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, recaps the price action post the FOMC and the strong, more like wow, reading from the latest jobs report. George believes the rates market is normalizing to the idea that the Fed is “not done” and will likely be on hold for longer at higher rates, as well. That said, longer-term rates investors remain skeptical about the current state of the economy and the ability of the Fed to maintain rates elevated, or at a minimum, or are using long duration as a hedge to a potential financial accident and/or exogenous shock ahead.

Meanwhile, if the next inflation reading declines less than expected, or worse, hints that the services side inflation remains “sticky” that could result in further repricing ahead, where that would not only hit rates but broader financial assets as well, like credit and equities. Overall, we continue to view the recent bounce as a bear market rally.

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