BofA Securities warns further rises in crude and refined fuel prices over the
next 3–6 months could push interest rates markedly higher. The U.S. two-year
nominal swap is up 113bps year-to-date; on oil-rising days it has cumulatively
gained 196bps and on other days lost 83bps. UK and German rates show larger
swings. BofA says higher energy-driven inflation would reduce constraints on the
Fed’s decision to hike, given resilient U.S. growth, consumption and a
still-tight labor market.
