US 10Y TREASURY: eyes FOMC projections

The US inflation data were posted during the previous week, showing that the inflation continues to slow down, with 0,1% in May. Also, the University of Michigan Consumer Sentiment data are showing decreasing inflation expectations for this year at 5,1%, from previously posted 6,6%, while the five year expectation eased to the level of 4,2%. However, the unrest on markets was imposed by new Middle East tensions, which were also reflected in the Treasury yields during the previous week. The 10Y yields started the week at 4,5%, and closed it at 4,4%. The lowest weekly level was at 4,3% on Friday, but the Middle East unrest pushed the yields toward the 4,4%.

The week ahead brings the FOMC meeting and Feds macro projections, which is scheduled for Wednesday, June 18th. It is widely expected that the Fed will leave rates unchanged at this meeting, while the odds are increased for a rate cut in September. Certainly, the day of the FOMC meeting will bring some increased volatility, considering investors sensitivity to the Fed's narrative and especially projections. The next supporting level for the 10Y yields stands at 4,2%. However, considering the current unstable geopolitical scene as well as the FOMC meeting, there is also an equal probability for 10Y yields to test higher grounds, around the 4,5% level, but not higher from it.