U.S. consumer prices are expected on Wednesday to show headline inflation slowed to its lowest since early 2021 at 3.1%, down from 9.1% a year earlier.
"Barring any upside surprise, U.S. inflation should ease from here and the Fed might be near done," added Kamal. Currently futures imply around a 90% probability of a rise to 5.25%-5.5% this month, and a 24% chance of a move in September. The risk of higher global rates for longer has caused havoc in bond markets, where U.S. 10-year yields jumped 23 basis points last week, German yields 24 basis points and UK yields 26 basis points.The jump in developed-world yields caused ripples in currency markets, particularly in carry trades where investors borrow yen at super-low rates to invest in high-yielding emerging market currencies.