Monday 15th January 2024

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There were big falls in 2 year Treasury yields on Friday. NAB’s Ray Attrill says this can be attributed to softer than expected producer prices in the US, which feeds through to the PCE deflator number that the Fed uses as its inflation measure. So what has this done to rate cut expectations? Ray says we’re still not back to where we were in the lead up to Christmas. Inflation is coming down much more slowly in Europe. Will it be delayed further by the crisis in the Red Sea? China published weaker loans data at the end of the week, and the PBoC is expected to lower the medium-term loan rate today. We’ll also see whether there’s any response from China to the Taiwan election result whilst the US holds the first Republican Caucus, in Iowa, where Trump is well ahead in the polls.

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