CIBC Research discusses its expectations for tomorrow's FOMC policy meeting,
"We believe that the most likely outcome will be a conservative one, meaning no new information on the footprint of QE. At the same time, we do expect a lift to the core PCE central tendency projections in the out-years. That ‘should’ help TIPS breakevens in the long-end of the curve, which is one of the main catalysts for a steeper nominal curve. The interesting dynamic in TIPS right now is the correlation breakdown between real-yields and breakevens. 10yr real rates are trading at historic lows, while 10yr breakevens are now back above pre-pandemic levels," CIBC notes.
"If our base-case is confirmed, real yields should rise which should do three things: i) strengthen the USD; ii) weaken precious metals, and; iii) steepen the nominal 5s30s curve," CIBC adds.