Markets hopes for Fed interest rate cuts are rapidly fading away

Why it matters

If readings around markets hopes fed remain elevated, central banks face pressure to delay rate cuts, keeping real borrowing costs high and weighing on credit growth. Should fed interest rate feed through to wage negotiations, a price-wage spiral would extend the tightening cycle and widen sovereign bond spreads. A credible decline in core measures would reopen the door to easing and compress front-end yields.