JPMorgan recommends closing long-end US Treasury spread trades and waiting for CPI and Waller's testimony
According to Golden Ten Data on July 14, JPMorgan strategists suggest that investors should close flattening trades on the 10- to 30-year US Treasury yield curve ahead of the release of US CPI data and Federal Reserve Chair Walsh's first testimony before Congress, to address the upcoming event risk. The strategists stated in the report: "Due to further escalation of geopolitical tensions and hawkish comments from Federal Reserve officials, short-term US Treasury yields rose by 6 basis points, and the yield curve flattened by 3 basis points." The report pointed out that Federal Reserve Governor Waller expressed concerns that the recent high inflation could become entrenched in market inflation expectations. Waller stated that if the upcoming CPI data continue to show persistent core inflation pressures, the Federal Reserve "will need to consider tightening monetary policy in the near term."
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