We believe we might see a soft US PPI & CPI data this week to bring rates lower from last week’s closing. Though we do believe that core PCE might inch up to 2.7% YoY in the July no (due to base effects) up from 2.6% in June, Fed Chair Powell might be content with the progress seen in the last 4 months. Hence, we can expect a dovish commentary from him in the Jackson Hole meeting on 22nd-24th Aug. Last week up move in US bond yields were also a function of large IG (investment grade) bond supply in last week (45 BN USD) as well as poorly received auctions in both 3yr and 10yr USTs. This week we do not have any dated UST supply as well as corporate bond supply is likely to be lighter than last week (indicative 28 BN USD).
