📉 Money managers who loaded up on US government bonds as a bet against recession are now facing subpar returns and a deepening selloff as Treasury yields rise.
📉 The annual return on US government bonds turned negative last week as Treasury yields reach a 15-year high, suggesting that interest rates will remain elevated and the economy can handle it.
📉 Bob Michele, CIO for fixed income at J.P. Morgan Asset Management, remains undeterred and is buying every dip in bond prices.
📉 Other prominent money managers, including Allianz Global Investors, Abrdn Investments, Columbia Threadneedle Investments, and DoubleLine Capital, believe that the impact of Federal Reserve rate hikes is just starting to be felt by the economy and predict a recession.
📉 Fund managers are making adjustments to duration to hedge their positions, with some shortening duration while others maintain overweight positions.
📉 Historical patterns suggest that rate hikes often lead to slumping economies, but it remains uncertain whether yields will follow the same pattern this time.
📉 The borrowing needs of wealthy economies and the flood of debt issuance may lead to higher yields.
📉 Despite the current environment, some funds that took short bond, long stock positions have faced significant drawdowns, indicating that rates may remain elevated.
📉 J.P. Morgan's Michele is confident that bond yields will fall once the Fed finishes its tightening cycle, even before the first rate cut.
The majority of economists polled by Reuters predict that the U.S. Federal Reserve will not raise interest rates again, and they expect the central bank to wait until at least the end of March before cutting them, as the probability of a recession within a year falls to its lowest level since September 2022.
Two Federal Reserve officials suggest that interest-rate increases may be coming to an end, but one of them believes that further hikes may still be necessary depending on inflation trends.
Federal Reserve Bank of Philadelphia President Patrick Harker does not believe that the U.S. central bank will need to increase interest rates again and suggests holding steady to see how the economy responds, stating that the current restrictive stance should bring inflation down.
Boston Federal Reserve President Susan Collins stated that the central bank may require additional interest rate hikes and will likely maintain elevated rates for an extended period, even if no further increases occur in the near future.
Two Federal Reserve officials, Boston Fed President Susan Collins and Philadelphia Fed President Patrick Harker, suggested that the Fed may be nearing the end of interest rate increases, although Collins did not rule out the possibility of further hikes if inflation doesn't decline.
The Bank of England may have to increase interest rates if the US Federal Reserve decides to raise rates to cut inflation, in order to prevent the pound from weakening and inflation from rising further.
The Federal Reserve is considering raising interest rates again in order to reduce inflation to its targeted levels, as indicated by Fed Governor Michelle W. Bowman, who stated that additional rate increases will likely be needed; however, conflicting economic indicators, such as job growth and wage growth, may complicate the decision-making process.
The former president of the Boston Fed suggests that the Federal Reserve can stop raising interest rates if the labor market and economic growth continue to slow at the current pace.
The Federal Reserve's preferred inflation gauge increased slightly in July, suggesting that the fight against inflation may be challenging, but the absence of worse news indicates that officials are likely to maintain interest rates.
Wall Street banks are revising their outlooks for Turkish interest rates as inflation rises faster than expected, with JPMorgan, Morgan Stanley, and Bank of America suggesting that borrowing costs may need to rise higher or quicker in response to the surge in price growth.
Federal Reserve policymakers are not eager to raise interest rates, but they are cautious about declaring victory as they monitor data such as inflation and job growth; most do not expect a rate hike at the upcoming policy-setting meeting.
The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.
Rising energy costs are predicted to contribute to an increase in inflation rate, but it is unlikely to prompt the Federal Reserve to raise interest rates, though there may be another rate hike in the future.
New research suggests that elevated interest rates may not have been the main cause of the decline in inflation, sparking a debate about whether the Federal Reserve needs to raise rates again.
Goldman Sachs strategists predict that the Federal Reserve is unlikely to raise interest rates at its upcoming meeting, but expect the central bank to increase its economic growth projections and make slight adjustments to its interest rate projections.
Federal Reserve officials are expected to leave interest rates unchanged at their meeting, but investors will be focused on whether there will be another rate increase before the end of the year.
The Federal Reserve has revised its interest rate forecast, planning for fewer rate cuts next year than previously anticipated, which may not be favorable for borrowers.
The Bank of England has opted not to raise interest rates for the first time in nearly two years, as inflation in Britain unexpectedly slowed and officials warned that the battle against persistent inflation is not yet over.
Stocks may not be as negatively impacted by higher interest rates as some fear, as the Federal Reserve's forecast of sustained economic growth justifies the higher rates and could lead to increased stock valuations.
At least one more interest-rate hike is possible, according to Federal Reserve officials, who suggest that borrowing costs may need to remain higher for longer in order to address inflation concerns and reach the central bank's 2% target.
Billionaire investor Bill Ackman expects 30-year interest rates to increase further and sees inflation remaining high, while his hedge fund remains short on bonds.
Chris Harvey of Wells Fargo Securities believes that the Federal Reserve will no longer increase interest rates, while Tom Kennedy from J.P. Morgan Global Wealth Management advocates for multi-asset investing.
JPMorgan Chase CEO Jamie Dimon warns that interest rates could rise significantly from their current levels due to elevated inflation and slow growth, potentially reaching 7%, and urges businesses to prepare for this stress in the system.
The former Goldman Sachs chairman and CEO, Lloyd Blankfein, believes that the Federal Reserve may not need to keep interest rates high for an extended period, as cuts to rates could be on the horizon sooner than expected due to relatively subdued inflation, despite the tough rhetoric from top Fed officials.
J.P. Morgan strategists predict that the Federal Reserve will maintain higher interest rates until the third quarter of next year due to a strong economy and continued inflation, with implications for inflation, earnings, and equity valuations as well as potential impact from a government shutdown.
Financial risk strategist Larry McDonald warns that a slowdown in the economy and increasing debt levels may force the Federal Reserve to reconsider its strategy of hiking interest rates, potentially leading to a big debt default cycle next year, and advises investors to shift their focus from growth stocks to hard assets and commodities such as "sexy metals" like uranium and copper, as well as real estate and art.
Billionaire investor Bill Ackman predicts that the Federal Reserve is likely done raising interest rates as the economy slows down, but warns of continuing spillover effects and expects bond yields to rise further.
The Federal Reserve remains committed to raising interest rates despite the rise in U.S. bond yields, as the U.S. economy shows signs of re-accelerating in the third quarter and inflation worries ease.
Interest rates for certificates of deposit and high-yield savings accounts have increased significantly in recent years due to the Federal Reserve's rate hikes, but it is uncertain if rates will continue to rise or if they have reached their peak.
The chaos in Washington and uncertainty surrounding a possible government shutdown could make it less likely for the Federal Reserve to raise interest rates again this year, as the economy and inflation appear to be cooling off.
The Federal Reserve may not raise interest rates again this year due to an already uncertain political climate in Washington, as well as a cooling economy, slowing inflation, and potential negative impacts from high interest rates and a government shutdown.
JPMorgan Asset Management CIO discusses market trends, Fed's inflation fight, and impact of interest rates on Treasury yields.
The Federal Reserve is expected to keep interest rates higher for longer due to the potential inflation caused by rising oil prices amid the escalating war between Israel and Hamas, according to billionaire venture capitalist Chamath Palihapitiya.
Higher-for-longer interest rates are expected to hinder U.S. economic growth by 0.5%, potentially leading unprofitable public companies to cut their workforce, according to strategists at Goldman Sachs, who also noted that the Federal Reserve's current benchmark rate is insufficient to cause a recession. Additionally, the firm warned that the high rates could increase the U.S. debt-to-GDP ratio to 123% over the next decade without a fiscal agreement in Washington.
The Federal Reserve officials suggested that they may not raise interest rates at the next meeting due to the surge in long-term interest rates, which has made borrowing more expensive and could help cool inflation without further action.
Rising bond yields may remove the need for the Federal Reserve to raise interest rates in November, as some investors believe, but a stronger-than-expected inflation report could change that perspective.
Investors are betting that the Federal Reserve may not raise interest rates again due to recent market moves that are expected to cool economic growth.
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