Comments to lawmakers did little to sway some in futures markets tied to the Fed’s policy rate
A hawkish tilt from Federal Reserve Chair Jerome Powell hasn’t been enough to convince some investors that the central bank is unlikely to hold U.S. interest rates at elevated levels for much longer.
Powell’s comments did little to sway investors in futures markets tied to the Fed’s policy rate, which on Wednesday reflected bets for only one additional rate increase this year, followed by cuts in January. The Fed’s projections, by contrast, imply 100 basis points of rate cuts from a peak of 5.6% by the end of 2024.
Skeptical investors have cited a range of factors for that rationale, from the lag with which monetary policy tends to take effect to the warning emanating from some parts of the U.S. yield curve, which has been inverted over the last year and became even more so in recent days - a signal that has preceded recessions in the past.
An inverted yield curve occurs when yields on shorter-dated Treasuries rise above those for longer-term ones. It suggests that while investors expect interest rates to rise in the near term, they believe higher borrowing costs will eventually hurt the economy, forcing the Fed to later ease monetary policy. The 2/10 spread has inverted 28 times since 1900. In 22 of these instances, a recession followed, analysts at Commonwealth Financial Network said last year.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Feds table bill to tackle travel chaos as summer season ramps up - National | Globalnews.caTransport Minister Omar Alghabra says a disruption at one end of the travel system can have ripple effects across the entire network, prompting the move toward more transparency.
Read more »
Advocates urge feds to pass Bill C-22 the Canadian Disability Benefit ActDisability advocates are urging the federal government to pass the Canadian Disability Benefit Act before the House of Commons adjourns
Read more »
Advocates urge feds to pass Bill C-22 the Canadian Disability Benefit ActDisability advocates are urging the federal government to pass the Canadian Disability Benefit Act before the House of Commons adjourns
Read more »
Feds pressure Ontario on boreal caribou conservationEnvironment and Climate Change Minister Steven Guilbeault raises the prospect of issuing a critical habitat protection order
Read more »
Sorry, Beatles, investors need a lot more than love when picking assetsThe more popular a particular investment becomes, the less its profit potential. Read more.
Read more »
Sorry, Beatles, investors need a lot more than love when picking assetsThe more popular a particular investment becomes, the less its profit potential. Read more.
Read more »