Rates: Waiting for the CPI

If you were away from markets last week, rest assured that you didn't miss much. In the absence of major events and after the central banks, investors have had little in the way of crisp statistics to sink their teeth into.

Writing a regular macroeconomic paper can be a challenge. Especially when the news is somewhat scarce. We could dwell on the US activity indices, the S&P Global US Services PMI and the ISM services index, which came out above the 50 contraction zone. In other words, all is well, and the narrative of a soft landing for the US economy still holds water.

We'll now wait for the Consumer Price Index (CPI), scheduled for release on the 13th. The CPI Core is expected to rise by 3.7% at annual rates and by 0.3% at monthly rates. A publication above these levels could weaken the "lower inflation" pillar and, by extension, that linked to "lower interest rates" by central banks.

In the meantime, the US 10-year yield remains in a horizontal consolidation channel between 3.85% and 4.23/25%. If this resistance is breached, a more substantial recovery towards 4.40/4.43% can be envisaged, with a peak expected around 4.60%. On the other hand, a breach of 3.85% would open the way for a further decline towards 3.26%.