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Macro & Markets: Careful cuts
Rate cut expectations have been on the increase again lately. We think that longer out the market is pricing in too much easing from the Fed and too little from the ECB. Also history strongly supports the latter. “Members saw the latest inflation developments as evidence that the impact of the past extraordinary shocks was waning and economic relationships were normalizing” – Account of the ECB April monetary policy meeting After three consecutive upside surprises in US core CPI, a reading in line with expectations for April was enough to give more fuel to the bond rally that has been seen in the past few ... (full story)