Trump's Low-Rate Guy Won't Matter--The Market Has All The Cards

Summary

• Markets are reacting negatively to the prospect of a dovish Fed chair, fearing it could stoke inflation and push long-term rates higher.
• Today's hotter-than-expected CPI report confirms a rising inflation trend, with inflation expectations breaking out across multiple swap and breakeven metrics.
• Technical indicators show the dollar strengthening and long-term Treasury yields climbing, contradicting the intended effects of rate cuts.
• Even if the Fed cuts rates, market forces may drive long-end yields higher, especially if inflation expectations become unmoored.