In this Macro Matters edition, host and BI Chief US Interest Rate Strategist Ira Jersey is joined by Noel Hebert, BI Chief US Credit Strategist, and Angelo Manolatos, BI Senior Associate Interest Rate Strategist.
Jersey shares his thoughts on the June FOMC meeting, which he calls a “dovish 75-basis point hike” as Chairman Jerome Powell’s comments that interest rate increases of that magnitude wouldn’t be common, and said he expects the Federal Reserve will raise the federal funds rate to over 4%. Hebert then discusses the fundamentals, technicals and valuation of the investment grade and high yield corporate bond markets. He notes a shift in investor preference toward floating rate loans and the challenges some companies may have as rate increases bump up interest expense. Hebert also reviews some sectors he’s concerned with, and others which may outperform as the Fed tightens monetary policy. In this episode’s Fun Fed Facts segment, Manolatos reviews the Fed’s summary of economic projections and the dot plot, noting how, if the high dot for year-end is realized, there would need to be at least one additional 75-bp move before year-end.
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