FOMC cuts wouldn’t guarantee lower long-end yields

Today’s July US CPI data came in broadly in line with consensus expectations, so have done little to shift the prevailing market narrative that the FOMC is on track to resume cutting its policy rate in September. However, the “twist steepening” of the US yield curve since the data release (and President Trump’s accompanying commentary) hints at the risk that lower policy rates may not lead to lower long-term Treasury yields.