FICC

Next week’s CPI and PPI reports will be much more important determinants of the near-term Fed policy path than this morning’s employment report. However, if the trend of labor market tightening continues through year-end, it could lead to a re-acceleration of wage growth in 2027.

Our Portfolio Allocation Summary for September 2026.

The PCE/CPI gap is an increasingly important factor driving the near-term outlook for Fed policy. We discuss the drivers of that gap and conclude that it’s likely to narrow in the coming months.

The US Treasury department’s attempts at yield suppression are doomed to fail unless the Federal Reserve gets involved.

Despite recent increases, long-maturity Treasury yields are roughly consistent with fundamental fair value. We see limited value in long duration plays.

July’s CPI reading was low enough to keep the Fed on hold for now, but near-term upside inflation risks remain.

Our Portfolio Allocation Summary for August 2026.

Despite today’s hold, the bar for a rate hike in September remains low and contingent on the next two core CPI reports.

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