JPMorgan Econ FI-Treasuries May the dots rise up to meet you-107058927

JayBarryAC(1-212)834-4951AfonsoBorges(1-212)834-4349NorthAmericaFixedIncomeJPMORGANjohn.f.barry@jpmorgan.comafonso.borges@jpmorgan.comStrategyJ.P.MorganSecuritiesLLCJ.P.MorganSecuritiesLLC15March2024PhoebeWhite(1-212)834-3092LiamLWash(1-212)834-5230phoebe.a.white@jpmorgan.comliam.wash@jpmchase.comJ.P.MorganSecuritiesLLCJ.P.MorganSecuritiesLLCTreasuriesMaythedotsriseuptomeetyou?•ThesharpriseinTreasuryyieldsthisweekreflecttheprimacyofinflationdataininformingtheexpectedpathofpolicyincomingmonthsasyieldssitneartheirhighestlevelsinmorethan3months•TheFOMCmeetingloomsonWednesday:theFedcouldraiseitsSEPtoreflectstrongergrowthandhigherinflation,andriskspointtofewercutsprojectedin2024andoverthelongerrunbutitwillbehardfortheChairtodeviatetoosharplyfromhisrecentcom-ments...•...Thisimpliesbearishriskstoyieldsoverthenearterm,butOISforwardshavepricedalaterstartandlessdovishpathforeasingin2024,andintermediateTreasuriesappearcheapaftercontrollingfortheirfundamentaldrivers,andwedonotrecommendchasinghigheryieldshere•WereviseourinterestrateforecastshighertoreflectamoregradualFedeasingcycle:weraiseouryear-endforecastfor2-yearyieldsby35bpto4.15%,andouryear-end10-yearforecastsby20bpto4%•Add3s/5s/7sbelly-richeningbutterfliesforcarry•PrimarydealerpositionsarelittlechangedYTD,butinventoryinthebellyremainsele-vated,anddispersionre...