US Inflation Narrative Remains Dominant Ahead of Key Data Releases

The US Treasury's mid-month refinancing operation later this week is gaining attention as the 30-year yield approaches its multi-annual high of 5.28%. The curve has been underperforming, with yields increasing between +4.7 bps and +6.4 bps on the 2-year to 7-year end. Cleveland Fed Governor Hammack reiterated her call for a rate hike, stating that now is the time to act.

The focus remains on inflation data, particularly Wednesday's US CPI and Thursday's PPI releases. The July US payrolls report led to a reevaluation of September Fed rate hike bets, but markets quickly recovered as the inflation narrative took precedence over employment numbers.

Global oil prices remain elevated due to the ongoing Iran-US stalemate, with Brent crude at $88/b. This has contributed to higher fuel prices and subsequently inflated consumer goods.