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....
Federal Reserve (Fed) Bank of Dallas President Lorie Logan struck a nervous tone on Friday, warning that despite a rapidly-weakening labor market, a lot of potential policy moves could accidentally spark another round of renewed inflationary pressures. Tariffs have been contributing to inflation.I'm worried about non-housing services inflation that's been elevated and stuck there. There are both upside and downside risks to my inflation outlook.If labor market were to slow more than anticipate, could see more disinflation than currently expect. The risks that tariff effects are more...
The so-called "neutral" stance for U.S. interest rates is likely to be closer to where the Federal Reserve has currently set borrowing costs, rather than where the central bank expects it to be in the coming years, according to analysts at Yardeni Research. In a note, the strategists argued that the neutral level -- a theoretical mark which neither helps nor hinders economic activity -- is hovering around 4%, roughly in line with where the Fed has placed rates. Fed officials, on the other hand, have estimated that neutral rate is 3% and have laid out projections to dip down to this level...
Bank of England (BoE) Monetary Policy Committee (MPC) member and Deputy Governor for Financial Stability, Sarah Breeden, stated on Tuesday that she believes the recent "bump" in inflation won't lead to further, long-term inflationary pressures. However, Breeden warned that consumer-level inflation expectations have risen dramatically, and is a cause for concern.The recent "hump" in inflation is unlikely to lead to additional inflationary pressure. Underlying disinflationary process looks to be on track but policymakers face a balancing act. Significant rise in household inflation...
In a statement after the September policy meeting, the Reserve Bank of Australia said: "With signs that private demand is recovering, indications that inflation may be persistent in some areas and labour market conditions overall remaining stable, the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting. Financial conditions have eased since the beginning of the year and this seems to be having some impact, but it will take some time to see the full effects of earlier cash rate reductions. The Board judged that it was appropriate to remain...
Federal Reserve (Fed Bank of New York President John C. Williams hit the newswires on Monday, expressing his general cautiousness toward further interest rate cuts but acknowledging that current Fed rate policy is tilted more toward the restrictive side at a time when the clear risk to underlying economic data appears to be heavier toward labor market weakness. Monetary policy continues to be restrictive, we're still in a position to put downward pressure on inflation.We still have a ways to go to get to 2% inflation goal.The Fed has a balancing act, underlying inflation moderating.The Fed...
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...