HSBC: Wednesday's Inflation Print Could Push Fed Hikes Out of Market Pricing

HSBC's Multi-Asset Strategist Duncan Toms believes that Wednesday's U.S. inflation report could be the next catalyst to push Federal Reserve rate hikes out of market pricing.

Toms noted that since July 23, U.S. rate pricing has pared some of its rate-hike expectations, and that last week's labor market report provides further evidence 'we may have already seen peak US Treasury hawkishness.'

HSBC launched two new dashboards to track the shifts in the U.S. labor market and inflation, aggregating a 'Labour health' series and an 'Inflation heat' series.

Toms stated that labor health is key to whether markets move in risk-on or risk-off fashion, while more extreme moves in inflation heat are closely tied to a 'Goldilocks or reverse Goldilocks backdrop.'