USD: Rise Of Real Yields To Keep Fed Cautious; USD To Remain In Check – CIBC

CIBC FX Strategy Research argues that while it might be tempting to look at today’s 5-year UST yield and conclude that interest rates have actually eased financial conditions so far this year, what really matters for investment and consumption decisions are not nominal yields, but real yields.

“And, there’s no question that 5-year real rates have been increasing. Both market-implied rates and those calculated using actual inflation data show a general uptrend in recent months,” CIBC notes.

 As a result, CIBC expects the Fed to remain cautious into year-end but still sees some upside for Fed hikes versus what’s now priced.

CIBC expects the USD to stay in check over the second half of 2017 as a result.

Source: CIBC Economics – CIBC Capital Markets

The article is published by one of the foremost sources of Forex trading information. Link to the original article above.

from eFXNews

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