Federal Reserve Chairman Jerome Powell confirmed the pivot he and his colleagues had been indicating over the last few weeks as the FOMC dropped its "patient" stance on monetary policy.

At their latest meeting, Fed policymakers clearly and firmly opened the door for easing as policy emphasis was shifted to weak inflationary pressures. The dot plots indicating the path of rates in future confirmed the dovish shift, though the median dots still remain far above market expectations. Chair Powell reiterated that sustaining the expansion remains the Fed’s key goal and also deflected questions related to political pressure from President Donald Trump.

We expect the Fed easing to start in July and anticipate it will likely be sharper and faster if data deteriorate at the current pace.

Together with the European Central Bank, the two main central banks are now, once again, firmly in accommodative mode, consistent with our expectations. Indeed, on the ECB front, President Mario Draghi brought both rate cuts and quantitative easing on the table (in line with our out-of-consensus call).

We believe yields globally are likely to remain under downward pressure until evidence of inflationary pressures emerge.