Fed's Policy, Treasury Yields, and Inflation in the Spotlight 🌏

Post retail sales, Atlanta Fed's GDP Now was revised up to 5.4%, and 2yr yields spiked above the May 21 highs as we approached 5.20%. Stop-outs were seen in long fixed income across the board, with treasury yields jumping +15bp across the curve (5th consecutive days of >10bp moves). Fed's Barkin added fuel to fire as he broke (dovish) ranks by stating that the Fed is "walking fine-line on over- and under-correction" in policy, and he needs to see further "convincing demand weakness feeding into inflation", and while he favors rates on hold for now, the Fed is "not there yet" in terms of tackling inflation. Rate hikes odds jumped back to 36% in December, with even a small bump in the Jan 2024 meeting odds to just over 10% on the back of the strong data. Powell's speech tomorrow at the Economic Club of NY will carry just that much more importance now, as it'll be one of the last official speeches before the communications blackout.

#GDPNow #Fed_policy #rate_hikes #December_odds #Powell_speech