Halister News

(Bloomberg) -- “The continued flattening of the Treasury yield curve likely puts the Fed in a cautious mood,” Renaissance Macro Research economist Neil Dutta writes in note.

• Fed would probably like to see steeper curve before lifting rates for 2nd time; achieving steeper curve “requires patience” even in face of stronger economic news
• “We lean to one hike this year over two”
• Robust payroll growth in last 2 mos. could simply be “catch-up” after tepid growth in early 2016
  • Underlying payroll growth is likely slowing
• Fed to “take a pass” in Sept. as FOMC’s “dovish core” “holds the line,” opting instead to raise rates in Dec.
  • “No need to rush to the exits” given slow moving inflation
  • Neutral risk assessment could reemerge as a compromise position to bring more hawkish FOMC members along