TD Securities analysts note the recent US curve flattening as investors took profit after a rally in rates, with Fed officials emphasising a cautious, wait-and-see stance on inflation and policy. The bank expects a weaker-than-consensus -2.8% print for durable goods and an in-line industrial production reading, while viewing upcoming FOMC minutes as likely stale given newer data.

Curve flattens as markets eye data

"The curve flattened on Tuesday as investors took profit following the rally in rates. Fed's Goolsbee spoke cautiously on the inflation mandate and Barr focused on the wait and see approach to monetary policy. Daly also said that AI is unlikely to impact the short-term neutral rate."

"On Wednesday, durable goods orders and IP will be in focus, where we expect a below consensus print of -2.8% m/m for durable goods and at-consensus for IP. FOMC minutes will also be in the afternoon, which could help gain some clarity on the division of the committee's thinking, though recent inflation and jobs data have likely made the minutes stale."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)