A lot may depend on how Powell frames it: Do fewer cuts this year mean more next year, or not? In March, Fed policymakers saw longer-run interest rates between 2.4% and 3.8%, as they had in December. But the median projection ticked up from 2.5% to 2.6%.
In March just one policymaker expected long-run rates below 2.5%, down from five a year earlier. If those projections start creeping up it could derail the bond rally that was already jolted by last week’s surprisingly strong jobs report.
In the Asia day, China’s consumer price index fell 0.1% in May from a month earlier, disappointing forecasts, as price wars exacerbate deflationary pressure in the world’s second-biggest economy.
Japan’s wholesale inflation jumped in May at the fastest annual pace in nine months, as the weak yen added upward pressure on prices. The data complicates the Bank of Japan’s decision, on Friday, on how soon to raise interest rates.
Overnight implied volatility for dollar/yen spiked to its highest in six weeks as traders strapped in for the ride.
