Stephen Junot

MOU-nting inflation concerns

Mark Cabana, Svia Salim, Stephen Junot, Megan Swiber

Bank of America Global Rate Strategy analysts project three additional Federal Reserve rate hikes this year, driven by sticky core inflation and geopolitical tensions that have pushed European yields to post-2008 highs amid robust demand from life insurers. While BofA forecasts a temporary inflationary spike from World Cup-related spending in June, the bank anticipates the ECB and BOE will remain responsive to oil-driven risks with the Fed shifting from a cutting bias to a hold or hike stance. Consequently, the firm advises clients to maintain an underweight position across the yield curve, particularly at the front end, to mitigate the potential for further rate increases in the coming months.