Despite strong jobs data, the yield curve has inverted once again. This inversion is driven by delay in rate cut expectations.
Encouraging PCE data which showed inflation easing to 2.2% (lowest since 2021 & close to Fed's target), the likelihood of a cumulative 50 bps cut has steadily risen.
Soft landing reduces urgency for aggressive rate cuts, giving the Fed more flexibility to monitor the effects of previous rate hikes and to lower rates more gradually.