J.P.Morgan U.S. Rates Overreacting To Global Developments

J.P.Morgan think "U.S. rates are overreacting to the developments abroad and that the relationship between front end DM yields is far from straightforward. Inflation developments have been global in nature and inflation is indeed proving to be less transitory than previously expected, but our understanding of the Fed's reaction function as well as our view on likely compositional changes on the FOMC leads us to believe that the Fed is unlikely to follow its British and Canadian counterparts in raising rates too early simply on inflation concerns. While Chair Powell last week acknowledge that the two mandates "are in tension," we expect the Fed to keep the focus on the employment side of the mandate and thus remain more accommodative than other central banks."