Hello- could you please explain this statement. "If these (inflation swaps)begin to rally on higher-than-expected inflation prints, it is likely that the forward curve will begin repricing the rate cuts." Why will the rally in inflation swaps reflect in rate cuts in the forward curve?
I think I might of originally misspoke. I went back and edited the article. But the idea is that if inflation swaps begin to rally on higher than expected inflation, the forward curve is likely to price in more rate HIKES. Basically as inflation surprises= Fed is constrained to hike more.
Hello- could you please explain this statement. "If these (inflation swaps)begin to rally on higher-than-expected inflation prints, it is likely that the forward curve will begin repricing the rate cuts." Why will the rally in inflation swaps reflect in rate cuts in the forward curve?
I think I might of originally misspoke. I went back and edited the article. But the idea is that if inflation swaps begin to rally on higher than expected inflation, the forward curve is likely to price in more rate HIKES. Basically as inflation surprises= Fed is constrained to hike more.
yes agree with this- thank you vm for clarifying.