US Treasuries bear flattened after stronger US CPI and hawkish remarks from Governor Waller prompted markets to price further Federal Reserve tightening. December rate-hike expectations edged up from 25bp to about 28bp, while pricing for hikes in 2027 rose to 45bp from 34bp. Front-end yields moved higher in response, leaving the curve flatter. Breakevens widened as the repricing gathered pace.
Attention is shifting to whether subsequent Fedspeak reinforces Waller’s suggestion that a “catch up” 50bp move could be required, which would likely keep pressure on the front end. The bank also flagged risks for inflation-linked markets, warning that highly negative breakeven carry in early 2027 could become a headwind for the asset class.
Strategic Rate Hikes And CPI Figures
strategic rate hikes, bear flattening, breakevens, CPI figures.
Historical Precedents For Bear Flattening
Let’s do a quick search on bear flattening statistics or historical precedents (e.g. 2022/2023 or recent curve flattening).
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