The consensus forecast is that inflation will soon peak.
With inflation soon peaking, the question in rates markets is when the Fed will turn more dovish because there is less need for the Fed to be as hawkish once inflation begins to trend lower.
If the Fed starts to sound more dovish because of inflation trending lower, then long rates will likely peak and begin to move down in anticipation of fewer Fed hikes and slower growth coming.
With this asymmetric setup, the pain trade in markets this week is if we get an inflation print lower than the expected 8.4%. In that case, rates are likely to move lower across the curve quickly.
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