The “Higher for longer” narrative gains prominence as yields rise.

The recent explosive surge in US Treasury bond yields could persist as Federal Reserve members are poised to reiterate the need to exercise caution in cutting interest rates too soon.

If last week’s pattern continues, Fed representatives scheduled for this week may sound aggressive, according to a note from Macquarie, as they seek to distance themselves from Jerome Powell’s moderate tone in March 2020.

There is room for the dollar to strengthen alongside the rise in US yields ahead of Wednesday’s consumer inflation report.

Fed members could point out the cost of an early cut, although they could also suggest that the Fed’s estimates of the neutral rate for the US may need to rise further.

Last week, Fed speakers warned about the dangers of cutting rates too soon. Minneapolis Federal Reserve Bank President Neel Kashkari made headlines by suggesting the possibility of not cutting rates this year if inflation continues to move sideways instead of declining.

Kashkari, President Austan Goolsbee, New York Fed President John C. Williams, Atlanta Fed President Raphael Bostic, and San Francisco Fed President Mary C. Daly are among the Fed members speaking this week.

The new statements from Fed members will come just as the latest consumer inflation figures and the minutes of the March Fed meeting are released on Wednesday.

Meanwhile, the euro could also face pressure from a more moderate European Central Bank. The ECB meets on Thursday, and some speculate there could be a slight chance of a rate cut.

This week’s meeting is live as far as the ECB is concerned, although June is probably the time they could cut for the first time.