CPI report showed inflation relatively contained; bond yields fell. What comfort does this give the Fed?
Scarlet Fu
Kathy Jones
CPI helps but core services still pushing up inflation; Fed looks at PCE, not CPI. Strong economy, fiscal stimulus, inflation above 2% target means Fed has no real impetus to cut.
Steepening yield curve; you say another path of least resistance is a lower dollar. Talk through how you see this playing out.
Scarlet Fu
Kathy Jones
Dollar has been falling after decade-long rally; diversification away from US; investors moving to other markets like emerging markets; Fed easing, global growth helps; president favors weaker dollar, geopolitical risks open door to softer dollar.
Treasuries traded like safe haven; 30-year auction well bid. Do auctions matter as tell on sentiment?
Scarlet Fu
Kathy Jones
30-year auction notable; well-bid signal people looking for duration, still view US Treasuries as safe haven; tariff uncertainty dying down encouraged buying.
Reports China instructing banks not to load up on Treasuries. Is that taking shape?
Scarlet Fu
Kathy Jones
Haven't seen huge movement in data; might be political signaling; doesn't square with information we have.
Do you look at technical factors?
Scarlet Fu
Kathy Jones
Follow technicals closely; tells about sentiment, trend; divergence makes me question my view.
Mike McKee noted tariffs coming into CPI more than anticipated. Do you worry about data integrity due to BLS cutbacks?
Scarlet Fu
Kathy Jones
Worried about integrity due to cutbacks in personnel and survey funding; can't make good decisions without good data.