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....
US Federal Reserve (Fed) Chairman Jerome Powell is scheduled to deliver a speech titled "Economic Outlook and Framework Review" at the annual Jackson Hole Economic Symposium on Friday at 14:00 GMT. Market participants will be closely watching Powell's speech for new clues on the direction of monetary policy, particularly regarding the timing of the Fed's first interest rate cut this year and the potential scope and timing of subsequent rate cuts. Powell's remarks are expected to roil markets, triggering intense volatility around the US dollar (USD), as the world's most influential central...
Fed Chair Powell's looming speech at the annual Jackson Hole symposium will be the next catalyst for the U.S. dollar moves, says Joe Capurso, an economist at Commonwealth Bank of Australia. Still, don't expect Powell to give a clear signal in either direction. He is likely to keep his options open and wait for more data, Capurso says. But if Powell signals openness to an interest rate cut, expect the market to more fully price a September cut and the USD to fall modestly. A September cut is currently priced at about 70% which sets a high bar for Powell to 'out‑dove' the market, he...
Bets that the U.S. Federal Reserve will cut interest rates in September have dropped significantly over the past week, as markets prepare for Fed Chair Jerome Powell's speech at Jackson Hole on Friday. Last week, traders were pricing in a 99 percent chance of a 25 bps rate cut at the next Fed meeting. That is now down to 71.5 percent, according to Investing.com's Fed Rate Monitor Tool. The drop comes amid hotter-than-expected producer inflation data and some hawkish commentary from some Fed members. After a modest 0.3% July CPI number last Tuesday, last Thursday's red-hot monthly PPI of...
The Fed held rates steady at 4.25%–4.50% for a fifth straight meeting, as expected, but two governors dissented in favor of a cut the first such dual dissent since 1993. Policymakers observed that, while fluctuations in net exports continue to influence the data, recent indicators point to a moderation in economic activity in H1 contrasting with earlier assessments that growth was proceeding 'at a solid pace'. The Fed also said that the unemployment rate remains low while inflation remains somewhat elevated, and uncertainty about the economic outlook persists. The Fed reinforced that...
According to the FOMC Minutes, the two Federal Reserve policymakers who disagreed with the central bank's decision to keep interest rates the same last month were not joined by other policymakers in calling for lower rates at that meeting. Key Quotes Almost all participants at the Fed's July 29–30 meeting viewed it as appropriate to maintain the benchmark interest rate in the 4.25%–4.50% range. Participants noted it would take time to have more clarity on the magnitude and persistence of higher tariffs' effects on inflation. Participants assessed the impact of tariffs had become more...
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...