Dallas Fed leader Kaplan in an essay

  • Fed should gradually raise rates to neutral
  • After 3-4 hikes, Fed should step back and re-assess
  • Says will be watching the yield curve
  • Curve suggests US is 'late' in economic cycle
  • Sees GDP +3.0% this year
  • Rate hikes are best chance for extending cycle
  • Will monitor effects of hiking on global stability
  • Don't discount importance of inverted yield curve

US 2s-10s are trading +24 bps today.

There's nothing on here to suggest caution and I'm increasingly confident we're going to get Sept and Dec hikes, which should underpin the US dollar barring whatever happens in the trade war.

Here's the full text.