Perhaps the tightening cycle is coming to an end. Inflation in the eurozone was published today showing the lowest print since October 2021, when it was transitory. And the ECB announced in its last meeting, it might be done with hikes for now. In the U.S., the probability of more hikes is sinking below 40% and Fed funds, Fed dots and the SOFR curve are converging in a sign of stabilization, at least for now. The action seems to be on the long end of the curve, where Yields keep going up, particularly in Japan where the #boj may have lost control on the long end of its curve where yields have gone up 50% over the last few months. In the U.S., the 5% handle for the 10 year Treasury is being discussed, pressured by the deficit on the supply side and the lack of structural buyers, such as the Fed, China, Japan or U.S. financial institutions, in the demand side. We might be close to the tipping point. Equity valuations are adjusting accordingly.
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