Will the Fed Hike?
From the original
Neither inflation nor the labor market call for a hike, but long yields may require one
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Per the full note [source], the Fed minutes revealed a surprisingly broad range of views, including explicit mention of rate hikes, which markets had not priced. The desk highlights that this hawkish tilt reduces the probability of near-term cuts, but the overarching caveat—dependent on inflation persistence—preserves optionality. With two-year yields edging higher and the labour market deemed stable by most members, the near-term path is data-dependent rather than directionally clear.
Goldman Sachs: labour market "not that interesting" as inflation dominates Fed debate
The desk conveys that inflation concerns remain at the forefront of the Federal Reserve's policy decisions, with labour market dynamics playing a secondary role in shaping market sentiment. Per the full note from Goldman Sachs, the recent CPI print prompted a modest bond market rally as the likelihood of a Fed rate hike in September eased slightly. Notably, ongoing Treasury issuance pressures and strong corporate debt supply are contributing to a persistent rise in long-term yields—a dynamic expected to continue despite soft near-term data surprises from the employment sector.
Warsh shift points to an ‘insurance’ Fed hike
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