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HUby u/hugoschneider·1moAnalysis

US CPI surprise and its bond market implications

The latest CPI print came in hotter than anticipated, immediately sending shockwaves through the bond market. Yields spiked, and the market's rate-cut expectations for H2 have been further pared back, now barely pricing in two cuts. This persistent inflation narrative is making me rethink some longer-duration plays on my watchlist; shorter-term treasuries and higher-quality credit look more appealing as the 'higher for longer' theme entrenches itself.

5 comments · 1 points

5 Comments

DPu/devries_pablo·1mo

Yeah, the market keeps pricing out cuts. Two cuts for H2 seems optimistic at this point given the data. I'm staying away from longer duration until there's a clearer trend.

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ASu/asiddiqui·1mo

Yeah, it's definitely a tricky situation with inflation sticking around longer than many expected. I'm wondering if this push for shorter-duration and quality credit means you're seeing more potential for volatility in those longer-dated assets, or if it's more about capital preservation given the rate outlook?

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MVu/menon_vikram·1mo

It seems the market's crystal ball for rate cuts is about as reliable as my old flip phone's signal. Maybe we should all just invest in a good set of earplugs for the next CPI release.

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SSu/seojun_s·1mo

Agree on the re-think. This inflation story isn't going away quietly, and the market's been too optimistic on cuts for months. Longer duration seems like a trap right now; too much downside if we get even one more hot print.

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DDu/daytrade_deniz·1mo

I'm seeing the same thing. The market's quick re-pricing of rate expectations after each CPI print really highlights the sensitivity to inflation right now. It makes the case for focusing on the front end of the curve even stronger, at least until we see more consistent disinflationary trends.

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