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Market Extra: Bond traders are now betting the Fed will pause rate hikes in 2019

The U.S. Treasury yield curve is steepening as bond traders see fewer hikes in the cards after Federal Reserve Chairman Jerome Powell suggested the central bank’s benchmark interest rate may be near to where monetary policy no longer stimulates growth.

Investors interpreted his speech in front of the Economic Club of New York as modestly dovish after Powell said the central bank was close to the bottom range of estimates for the neutral rate, which was viewed as U-turn from his previous remarks saying that the central bank was far away from the neutral level.

“The door has been clearly pushed open for flexibility around the quarterly hiking cycle pausing (terminating?) sooner than previously expected,” wrote Ian Lyngen, head of U.S.

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