Core PCE's Critical Market Role This Week, U.S. Diesel Ban "Temporary Fix"

• Fixed income yields are attractive, but investors should not 'get ahead of the steamroller' as momentum for higher interest rates persists.
• The Fed is clearly biased towards hiking rates, with market probabilities suggesting at least one more hike this year, potentially early next year.
• Energy prices, especially diesel, are a significant swing factor for inflation globally, impacting central bank actions like the RBA's recent rate hike.
• Tomorrow's PCE print is identified as the most crucial economic metric this week, with expectations for a year-over-year gain over 3% and a month-over-month gain of 0.3%, which is likely 'too hot' for the Fed.

Schwab analysts discuss the current fixed income market, advising caution despite attractive yields due to ongoing inflation risks and the Federal Reserve's hawkish stance. Energy prices, particularly diesel, are highlighted as a critical swing factor for global inflation, influencing central bank decisions and equity valuations.