June and the “Draghi Effect”

June was progressing according to expectations. A rate hike at the June 14 FOMC meeting was a given, so it should not have much of an effect on anything. In effect, the 10-2 spread was falling on those expectations, as was the 5yr-5yr forward inflation expectations. The big move at the closing of the month reflected Draghi´s unexpected hawkish comments on the 27th, which helped lift rates around the world. Suddenly we hear hawkish comments from the major central banks, including the Fed, ECB, BoE, BoC and the RBA. Important to note that the last time the major central banks…

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