Summary: Time will be the judge whether the Fed's 25bp increase was warranted. The Fed's next meeting is a long way off: September 20. Between now and then, there will be 2 CPI and 2 monthly jobs reports---this could be a bumpy ride till then.
For example the CPI is currently 3.0% and its decline has been rapid. The next CPI report is August 10 for July 2023. My guess is CPI will be up 0.3% for the month. The problem is when this comes on, the July 2022 will fall off. CPI for July 2022 was 0.0%. Thus the next change will be an increase and the annual CPI will come in ~3.3% While this is not a material change in the annual rate, the fact that it is an increase, the market will be caught off guard given the improvement in CPI over the past 8 months.
Below are daily changes in 10 year Treasuries over the past two weeks---up 35bp The Fed raised the Fed Funds rate 25bp at their July 26 meeting and the 10 year US Treasury rates increased 15bp the next day.
8.3.23 Yield Curve remains inverted and got less steep this past week as longer term rates increased AGAIN more than shorter term rates. The 10 year went over 4.00% in the prior week but we have seen this before over the past 8 months.
