The Fed’s narrow path is getting longer

Thursday 21st September 2023

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The response to the FOMC announcement this morning was swift, with 2-year Treasury yields hitting a 17 year high. The equity markets switched into negative territory too. Why? NAB’s Gavin Friend says the fact that rates are on hold wasn’t a surprise, it was the rise in the median rate forecasts for next year and the year after. Higher for longer is slowly sinking in, but now, perhaps, it's even longer than many had imagined. Gilt yields took a hit as UK CPI came in much lower than anticipated. Could this mean the BoE will keep rates on hold? And a swag of other central banks today, plus New Zealand’s GDP. They are expected to claw out of recession, but for how long?

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