J.P.Morgan note that “the message we can discern from the Fed’s projections, alongside Powell’s commentary, continues to point toward a Fed that is likely to ease in June, but at a relatively slow pace as inflation slowly moderates back toward 2%.”

• That means they still “like trades which traditionally benefit as the Fed transitions to easing, namely 5s/30s steepeners, but also like mitigating the negative carry of these trades by also holding 2s/5s flatteners.”
• They also write “overall this is a window for earning carry, so we would rather be more patient before adding duration longs, while we continue to recommend 3s/5s/7s belly-richening butterflies.”
• “The combination of the more dovish reaction function implied by the SEP as well as Powell’s relatively optimistic reading of the recent inflation data present a more bullish backdrop for TIPS going forward, and we recommend adding back to longs in 5-year TIPS.”