Thread: Interest rate changes

10-year Treasury yield falls below 4% after the Fed signals a potential policy change

https://www.cnbc.com/2022/11/02/trea...icy-hints.html

Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead

The Federal Reserve on Wednesday approved a fourth consecutive three-quarter point interest rate increase and signaled a potential change in how it will approach monetary policy to bring down inflation.

In a well-telegraphed move that markets had been expecting for weeks, the central bank raised its short-term borrowing rate by 0.75 percentage point to a target range of 3.75%-4%, the highest level since January 2008.

https://www.cnbc.com/2022/11/02/fed-...uary-2008.html

Fed Hints At 'Slowdown' After Most Aggressive Tightening In Over 40 Years

Market participants are describing this as a 'soft pivot' but we note that while terminal rate expectations have dropped (dovishly) but rate-cut expectations have also dropped (hawkishly) - market is pricing higher rates for longer.

https://www.zerohedge.com/markets/fomc-4

Here’s everything the Federal Reserve is expected to do Wednesday

Wednesday’s meeting of the rate-setting Federal Open Market Committee will bring an assortment of moves to chew on.

In addition to an expected half-point interest rate increase, investors will be watching how the central bank communicates its future intentions.

“There is no need at this point to continue hiking rates but, of course, they will,” RBC Capital Markets economist Tom Porcelli said.

https://www.cnbc.com/2022/12/14/here...wednesday.html

Fed raises interest raises Fed Funds Rate by 0.50%. Gets more hawkish by raising their target rate to over 5%.

https://www.cnbc.com/2022/12/14/fed-...mber-2022.html

Goodbye negative negative yields.. for now.

As central banks around the world attempt tighten up inflation rates, so goes some of the last negative yielding bonds in the world. Japan’s economy ownes the last of the sub-zero-yielding debt.

It wasn’t long ago negative yielding debt was common in the global economy, particularly in Japan and European economies. The stimulus that kept economies alive through the worst of the pandemic is all being tightened back up to slow the whiplash of inflation.

But it’s not a final goodbye if the last sun-zero-yields in Japan disappear. The global economy is in perpetual oscillation, the pandemic was just an extra push to the pendulum.



https://www.wsj.com/articles/negativ...mobilewebshare

BlackRock warns that investors are making a mistake by betting on the Fed to cut rates

Market pricing as of Tuesday morning pointed to the Fed holding its benchmark interest rate at current levels and then starting to reduce as early as July.

The expectation for cuts would be consistent with a recession and an accompanying fall in inflation, assumptions that Wall Street strategists think are dubious.

“We think the Fed could only deliver the rate cuts priced in by markets if a more serious credit crunch took hold and caused an even deeper recession than we expect,” BlackRock strategists wrote.

https://www.cnbc.com/2023/03/28/blac...cut-rates.html

Fed increases rates a quarter point and signals a potential end to hikes

https://www.cnbc.com/2023/05/03/fed-...may-2023-.html

The FOMC acted as expected but cautiously spoke about their future plans. Investors were looking for validation that the rate hike campaign has ended and even clues to a rate cut in the second half of the year. Instead, the Fed obviously left themselves room to raise rates again if needed without blindsiding the market. The key statement in the policy statement was, “determining the extent to which additional policy firming may be appropriate”.

Chairman Jerome Powell kept the conservative language up in the following press conference. He spoke of an "ongoing assessment" of whether the current rate is sufficient. He spoke of the balancing act the Fed must be prepared for as the economy oscillates in the current environment with the main goal of reducing inflation to 2-3% while avoiding a major recession along the way.

Powell himself thinks it's more likely their inflation goals will be reached without a recession, and if the U.S. does fall into a recession, it would be mild. This is not supported by the past and is more a hopeful outcome if all goes well for the chairman.

In all the market was disappointed by this FOMC meeting. The S&P 500 was up around 0.3% before the policy statement and press conference then ended the day with a 0.7% loss.

Markets Are Looking Through Higher-Rates Messaging

Investors are shrugging off hawkish messages from last week’s central-bank meetings to focus on the narrative of a soft economic landing and resilient earnings as they seek catalysts to push stocks higher.

https://www.zerohedge.com/markets/ma...ates-messaging