Bank of America has warned that US Treasuries may retreat unless the Federal Reserve clarifies how it plans to bring inflation back to 2 %. Strategist Mark Cabana described the recent Treasury selloff as a textbook inflation credibility shock. Core PCE inflation stood at 3.3 % in June, 65 % above the 2 % target. BofA now projects three 25-basis-point rate hikes in September, October, and December, pushing the fed funds rate to a range of 4.25-4.50 % by year-end. Long-dated Treasury yields have climbed to levels not seen in nearly 20 years.
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