JPMorgan Econ FI-US Fixed Income Overview Third time is not a charm-107557160

PhoebeWhiteAC(1-212)834-3092HollyCunningham(1-212)834-5683NorthAmericaFixedIncomeJPMORGANphoebe.a.white@jpmorgan.comholly.cunningham@jpmorgan.comStrategyJ.P.MorganSecuritiesLLCJ.P.MorganSecuritiesLLC12April2024LiamLWash(1-212)834-5230liam.wash@jpmchase.comJ.P.MorganSecuritiesLLCUSFixedIncomeOverviewThirdtimeisnotacharm•TreasuryyieldsrosesharplyandriskassetsweakenedfollowingathirdconsecutiveupsidesurpriseinCPIinflation.Thoughtherecentstrengthinthedatahasdampenedourconfidence,westillthinkthatinflationissettomoderateovertimeandcontinuetoseetheFedfirsteasinginJuly,with3cutsthisyear•Economics:MarchcoreCPIrose0.4%(3.8%oya)withstrengthconcentratedincoreservicesextenant’srentandOER.WearetrackingcorePCErose0.27%lastmonth(2.7%oya).Webelieveheadlineretailsalesincreased0.3%inMarch,withthecontrolgroupup0.5%•Treasuries:EvenwithmarketspricinginlesseasingthanourmodalviewandTreasur-ieslookingcheaprelativetotheirdrivers,wearehesitanttoaddduration,asitwilltakemultiplesofterinflationandlabormarketreportsformarketstopriceinamoredovishpathandascarryremainsnegative.Monetarypolicyappearslessrestrictivethanwepreviouslythought,andtheshiftingofTreasurydemandtoprice-sensitivebuyersmayrequireahighertermpremiumandhencesteepercurves:hold5s/30ssteepeners.Holdlongsin5YTIPS.Shiftlong-endbreakevencurvesteepenerexposureto10Yx20Ybreakevenwid...