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Oil-led fuel costs and inflation fears lift bond volatility
December Fed Funds futures point to a renewed repricing of inflation risks after last week’s CPI and PPI.
Mortgage News Daily links the day’s bond selling to rising fuel prices tied to a resurgence of hostilities in the Iran war, which has also pushed expectations around inflation.
The outlet also notes that US stock and bond volatility has recently been elevated during the 9:30am to 10am hour in the lead-up to earnings activity, though it suggests that pattern may be easing today.
Mortgage News Daily adds that strategic concerns about the fiscal path are in the background, citing Jamie Dimon’s view that he would not buy long bonds due to those risks, which the outlet says could contribute to modest yield curve steepening.
Finally, the outlet points to December Fed Funds futures indicating the market is repricing inflation risks after it got too excited about last week’s CPI and PPI.