JPMorgan Econ FI-Global Macro Outlook and Strategy presentation 22nd July 202...-109357330

GlobalMacroResearchJuly22,2024LuisOganesAC(44-20)7742-1420luis.oganes@jpmorgan.comJ.P.MorganSecuritiesplcSeeendpagesforanalystcertificationandimportantdisclosures,includinginvestmentbankingrelationships.GlobalMacroOutlookandStrategyGlobalRates,Commodities,CurrenciesandEmergingMarkets|OverallsummaryUSRatesFollowingsofterJuneemploymentandinflationdata,togetherwithdovishremarksfromChairPowell,wenowexpecttheFedtofirstcutinSeptember,withaquarterlycadenceofeasesthereafter.Weadjustlowerourinterestrateforecasts,seeing10-yearyieldsreaching4.15%byYE24,from4.40%previously.Whilethisissupportiveofaddingduration,weremainneutralgivennegativecarryandwithOISpricinginamoredovishforecastthanourown.Wemaintain5s/30ssteepeners,butrecommendhedgingoverthenear-termbysellingabeta-weightedamountof2-yearTreasuriesWeforecastaslightlywider$1.9tnFY24deficit.Treasurywilllikelyleavecouponauctionsizesunchangeduntillate2025andprefertokeepT-billshareoftotaldebtelevatedabove20%.Demandcontinuestorotatefrompriceinsensitivetopricesensitivesources.AsplitCongressislikelytotemperanyPresidentialoutcome.ATrumpvictorylikelyresultsinmarginallyhigheryieldswhileaBidenvictorylikelymeansmodestlyloweryieldsInternationalRatesThejourneyofDMcentralbankstowardsagradualremovalofmonetarypolicyrestrictionmadeafurtherstepthisweek.TheECBkeptpolicyratesunchangedbu...