Market analysts Ian Lyngen, Ben Jeffery, and Vail Hartman discuss the stability of 10-year yields post-FOMC meeting, Japanese intervention's impact on treasuries, Fed's rate cuts, inflation-unemployment correlation, and upcoming economic indicators influencing the U.S. rates market direction.
Fed shifting towards a time-dependent stance for potential rate cuts in June, September, and December.
Importance of economic data in influencing Fed decisions and potential implications on market dynamics.
Deep dives
US Rates Market and Volatility
The podcast discusses the US rates market settling into a post-FOMC trading range with 10-year yields between 4% and the 435 support level. It mentions a period of consolidation expected before key data events in April, such as the release of March's payrolls data and CPI report. The Fed's shift to a more time-dependent stance rather than data-dependent is highlighted, suggesting potential rate cuts in June, September, and December. The podcast also mentions the importance of economic data in influencing Fed decisions.
Stagflation Concerns and Treasury Market Dynamics
The podcast addresses concerns around stagflation and how Fed policy may respond to economic outcomes. It discusses scenarios of unemployment rate changes, inflation trends, and Fed's potential rate cuts based on economic developments. The negotiation between stickier inflation and a weakening jobs market is examined, leading to potential implications on longer-term break-evens and market dynamics. The impact of Japanese yen support on treasury markets is also mentioned.
Future Fed Policies and Market Expectations
The podcast outlines differing views within the Fed regarding rate cuts and monetary policy approaches. It contrasts market expectations of rate cuts with Fed members' projections, highlighting potential risks in under-pricing rate cuts. Discussions on upcoming economic indicators, Fed speeches, and wage data's impact on the rates market are presented. The anticipated yield curve shape and the possible announcement of QT tapering by the Fed in upcoming meetings are also touched upon.
Ian Lyngen, Ben Jeffery, and Vail Hartman bring you their thoughts on the U.S. Rates market for the upcoming week of April 1st, 2024, and respond to questions submitted by listeners and clients.
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