JPMorgan Advises Closing 10-Year to 30-Year U.S. Treasury Flattener Ahead of CPI and Warsh Testimony

JPMorgan strategists advised investors to close a 10-year to 30-year U.S. Treasury yield-curve flattener trade ahead of the release of U.S. CPI data and Fed Chair Kevin Warsh’s first testimony to Congress, citing upcoming event risk. According to Jin10, the strategists said in a report that escalating geopolitical tensions and hawkish remarks from Federal Reserve officials pushed short-end U.S. Treasury yields up 6 basis points, while the yield curve flattened by 3 basis points. The report said Fed Governor Christopher Waller voiced concern that recent high inflation could become entrenched in market inflation expectations. Waller said that if the upcoming CPI data continues to show strong core inflation pressures, the Federal Reserve “will need to consider tightening monetary policy in the near term.”