CPI Report Looms as Markets Eye Potential Rate Cuts and Inflation Impact

The upcoming US core CPI report on Wednesday poses a challenge for long positions in the bond market, with expectations of stable inflation figures potentially limiting bullish sentiment on Treasuries. Despite a year of decent returns, mutual funds are reducing long-dated securities ahead of year-end. Meanwhile, the European Central Bank is expected to cut rates, with markets pricing in further reductions into 2025, although long-term uncertainties remain. Near-term volatility in EUR rates has decreased, but geopolitical and economic factors could drive future rate movements.