Recent U.S. inflation numbers had come in a bit warmer than expected, until this week’s tamer PCE numbers in the personal income report. Recent inflation numbers have not been hot, but still warm enough to likely have swayed the Federal Reserve into reckoning it will wait until the second half of 2024 to consider lowering interest rates. The market to watch following key U.S. inflation reports and other important economic data is the U.S. Treasury futures markets. Many times, immediately after the data is released, the Treasury bond and note futures markets’ price action will indicate what the marketplace thinks about the latest U.S. data. Remember that Treasury futures prices move in the opposite direction of the more closely followed yields. U.S. T-Bond and T-Note prices have been trending down the past four weeks. That suggests Treasury traders suspect U.S. inflation data will continue to be too warm to allow the Federal Reserve to lower interest rates this spring. So watch the U.S. Treasury bond and note futures closely after key reports. Remember the old market adage: “Bond traders are the smartest guys in the room.” Stay tuned! Jim Wyckoff