After the dovish pivot of Fed Chair Powell in Jackson Hole symposium, we get to see the data on consumer spending, core PCE & 2nd estimate of Q2CY24 GDP. These data points might help in supporting or rejecting the hard landing which bond markets seem to be pricing in currently at 230 bps rate cut by end CY25. Also, equity markets continued resilience stands contrary to Fed Chair’s pessimistic outlook on employment. Either the US equities must correct significantly or the US bond yields must go up by 15-20 bps across the curve. Already the financial conditions in US have loosened significantly post the dovish pivot of Powell. This might further add to stronger data on consumption as well as spending. Heavy supply in short end should keep yields elevated and flatten the curve.
