Fixed Income Outlook - VP June 2024 Big Picture Discussion
- We review our US Fixed Income Dashboard ahead of tomorrow's Fed Meeting and inflation data.
- Structurally: Fiscal deficits, demographics, geopolitical tensions, and pension funding ratios all bias yields higher.
- Cyclically: Our US term-premium, fair value, and neutral-rate models indicate fixed income markets are fairly priced on a 6-12m forward basis.
- Tactically: Our Fed Hiking Regime model has triggered, but Powell has made clear his reluctance to hike, with the risk-reward appearing limited when looking at STIR markets.
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