Conflicting signals from the Federal Reserve on the timing and magnitude of U.S. interest rate cuts have accelerated hedging flows into swaptions and derivatives tied to overnight rates, with investors seeking protection against heightened policy uncertainty. Short-term volatility --specifically three-months and under -- on longer-dated swaptions such as those on 10-year and 30-year swaps has picked up following a prolonged period of compression. Swaptions, which are options on interest rate swaps, are one segment of the more than $600 trillion over-the-counter rate derivatives market....
Brazilian President Luiz Inacio Lula da Silva said on Thursday that his government would reciprocate if U.S. President Donald Trump decides to impose tariffs on Latin America's largest economy, and called for mutual respect. "It is very simple: if he taxes Brazilian products, there will be reciprocity," Lula told a press conference in Brasilia. The United States runs a trade surplus with Brazil, which according to Brazil's government hit $253 million last year. But Trump this week named the country among those he believes meant the U.S. "harm," threatening potential tariffs. "China is a...
Bank of Japan Governor Kazuo Ueda avoided giving a clear signal that he might raise interest rates next month, sticking to his view that the bank needs to continue monitoring risks to the economy in comments that weighed on the yen. "The timing and pace of adjusting the degree of monetary accommodation will depend on developments in economic activity and prices as well as financial conditions going forward," Ueda said in a speech at a business conference in Tokyo on Wednesday. "The bank needs to pay attention to various risk factors at home and abroad, and to examine how these factors will...
The Swiss National Bank cut its interest rate by 50 basis points on Thursday, the biggest reduction in almost 10 years as it sought to stay ahead of expected cuts by other central banks and cap the rise of the Swiss franc. The SNB reduced its policy rate from 1.0% to 0.5%, the lowest since November 2022. While markets had predicted the move, more than 85% of economists polled by Reuters had expected a smaller cut of 25 basis points. It is the steepest drop in borrowing costs since the SNB's emergency rate cut in January 2015 when it suddenly quit its minimum exchange rate with the...
Chief Powell participates in a moderated discussion at the New York Times DealBook Summit, in New York. Key Takeaways Independence lets the Fed make decisions for all Americans, not any political party. There is broad support in both parties for an independent Fed; do not think there is risk of losing it. The U.S. economy is in remarkably good shape. Feel very good about where monetary policy is. Do not think appointment of a "shadow" Fed chair is on the table. Feel the same institutional relationships between the Fed and the Treasury will continue under the new...
U.S. consumer spending increased slightly more than expected in October, suggesting the economy retained much of its solid growth momentum early in the fourth quarter, but progress on lowering inflation appears to have stalled in recent months. The lack of success in bringing inflation back to the Federal Reserve's 2% target, together with the prospect of higher tariffs on imported goods from the incoming Trump administration, could narrow the scope for interest rate cuts from the U.S. central bank next year. The Fed is still widely expected to deliver a third rate cut in December, with...
President Donald Trump said he would fire Lisa Cook from the Federal Reserve's Board of Governors if she does not resign her post over mortgage-fraud accusations from a top...
The Reserve Bank of Australia (RBA) maintained its cash rate at 4.1% during its April meeting, holding borrowing costs unchanged after slashing 25 bps in the February meeting, aligning with market...