- Hawkish sentiments are emerging inside the Fed, casting doubt over the neutral rate level and pointing out potential prompts to adjust interest rates if needed, such as a resilient housing market and ascending inflation.
- Projections suggest a budding shift, indicating that the persistent strength of the US economy might elevate the median neutral rate in the future.
- Markets predict only a 10% probability of a rate cut at June's meeting. These probabilities reduce slightly over time with a projected 30% probability for a cut in July (down from 40%) and an 80% chance for September (down from 90%). A rate cut in November, however, remains fully priced in.
- US Treasury bond yields depict a scattered picture but are higher overall. The 2-year yield trades at 4.82%, mildly down while the yields for both 5-year and 10-year bonds, residing at 4.48% and 4.47%, respectively, show a slight upward inclination.
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