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....
The U.S. Federal Reserve holds its latest policy meeting this week with a historic challenge to its leadership pending in the courts and a rushed effort underway to confirm President Donald Trump's nominee to fill an open seat on the central bank's Board of Governors. The Fed is confronting a potentially intense pace of change between Trump's attempted firing of Governor Lisa Cook and the Senate's move to approve his nominee for a separate open seat. The move against Cook is both a first-of-its-kind test of the Fed's independence but also potentially disruptive to how the central bank is...
The Fed will be in the spotlight this week, as markets are now all but certain that the central bank will slash interest rates at the end of its latest two-day gathering on Wednesday. Underpinned by signs of a softening U.S. labor market, policymakers are widely anticipated to back the first rate cut since an easing cycle was paused in December. Bringing down rates can, in theory, help spur investment and hiring. However, a reduction can risk pushing up inflationary pressures at the same time. Last week, a monthly U.S. consumer price index reading accelerated slightly due to an uptick in...
The Federal Reserve is expected to deliver its first interest-rate cut this year at its September 16-17 meeting, as it moves to counter a cooling labor market even as inflation remains above target. The anticipated quarter-point reduction may not satisfy President Donald Trump, who wants a bigger cut and has named his White House economic advisor, Stephen Miran, in time to be on the Fed Board at the September meeting, pending Senate confirmation. Here is a look at Fed officials' comments since their last policy meeting, sorting them under the labels "dove" and "hawk" as shorthand for their...
United States (US) President Donald Trump and his administration have formally asked the federal appeals court to pause a federal order that would allow Lisa Cook to remain at her post at the Federal Reserve (Fed) pending an official probe into accusations of mortgage fraud. According to the Trump administration, potential mortgage fraud is so damaging to the Fed's credibility that Lisa Cook must be removed from the Fed's Board of Governors immediately and should not be allowed to remain in her position without waiting for the results of an official inquiry. Donald Trump, a sitting...
The International Monetary Fund on Thursday said the Federal Reserve has scope to lower interest rates because of the weakening U.S. labor market, but the central bank should move cautiously with a close eye on emerging economic data. "Our overall sense is that, given the downside risks to full employment, there is scope for the Fed to begin to lower policy rates," IMF spokeswoman Julie Kozack said in a regular briefing. "We also would say that the Fed should proceed cautiously, of course in a data-dependent way, in the coming months." The Fed is expected to lower its benchmark interest...
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...