Following the “hawkish cut” last week markets are now pricing in three rate cuts by next Christmas with the outside chance of a fourth. Our view is that while AI and corporate America remains strong its three at most with potential disappoint for mortgage holders hoping for further rate relief.
- After last weeks rare difference of opinion within the Fed we can see US 2s rotating between 3.5% and 4% over the coming months.
MM is now neutral towards US short-dated bonds, with yields.
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