Treasury prices declined in the overnight session as elevated European inflation metrics caused markets to reassess the path of monetary policy. Britain’s Consumer Price Index rose 10.1% y/y driven by a strong increase in food prices. UK Gilt 2-year yields surged 15bps to price in additional rate hikes from the Bank of England and curb the highest inflation metrics across G-7 countries. In the US, overnight index swaps have priced in one additional quarter point rate hike in May before easing policy toward the end of the year. However, recent commentary from Federal Reserve leaders has varied. James Bullard, the St. Louis President, favors a 5.5%-5.75% range according to Reuters. Whereas his Atlanta counterpart, Raphael Bostic supports a less dramatic approach to hold rates constant after the 25 bps May hike.
Chris Eckhoff
Director, Investment Management Group
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