The bond market is
since the Federal Reserve and other central banks embarked on a tightening cycle.
betting on a “dovish pivot” for the seventh time
since the Federal Reserve and other central banks embarked on a tightening cycle.
• Bottom-line: 이번 주 금요일은 채권 투자자들이 중앙은행이 금리를 인하하게 될 것이라고 예상을 바꾼지 1년이 되는 날임. 그러나 지난 12개월 간 중앙은행은 150bp의 금리인상을 단행했고, 10년만기 국채 수익률도 40bp 상승하며 그들의 베팅에 상당한 고통을 줌. 종국에 채권 거래자들이 맞을 수 있지만, 이 고통을 감내해야 하는 시간은 예상보다 길어질 수 있음.
The pain trade for bond investors will likely to continue as they hold on to bets on a Fed pivot despite lofty yields. Rates traders are about to mark a perhaps uncomfortable anniversary. Friday will be a year to the day since they switched to pricing in a Federal Reserve pivot to rate cuts within a year. The one-year forward US cash rate dropped to more than 25 basis points below the six-month forward on Nov. 10, 2022 and it has remained at or below that level pretty much ever since. The uncomfortable part is that 10-year Treasury yield have climbed about 40 basis points during the past 12 months, as the Fed hiked rates 150 basis points. The bond market apparently decided that a pivot to rate cuts was inevitable as soon as it became apparent that the Fed would slow the pace of its hikes after delivering a fourth-straight 75 basis point increase last November.
, but the pain trade for bonds remains a stickier tightening cycle than they anticipate.
The pain trade for bond investors will likely to continue as they hold on to bets on a Fed pivot despite lofty yields. Rates traders are about to mark a perhaps uncomfortable anniversary. Friday will be a year to the day since they switched to pricing in a Federal Reserve pivot to rate cuts within a year. The one-year forward US cash rate dropped to more than 25 basis points below the six-month forward on Nov. 10, 2022 and it has remained at or below that level pretty much ever since. The uncomfortable part is that 10-year Treasury yield have climbed about 40 basis points during the past 12 months, as the Fed hiked rates 150 basis points. The bond market apparently decided that a pivot to rate cuts was inevitable as soon as it became apparent that the Fed would slow the pace of its hikes after delivering a fourth-straight 75 basis point increase last November.
At some stage traders are likely to end up being right
, but the pain trade for bonds remains a stickier tightening cycle than they anticipate.
The S&P 500 has inched higher this week and if the index closes up for another day, it would mark the longest winning run since 2004.
Recurring applications for US unemployment benefits rose for a seventh straight week, adding to
evidence that the labor market is cooling.
Federal Reserve Chair Jerome Powell said the US central bank won’t hesitate to tighten policy further if appropriate and reiterated that the central bank isn’t fully confident that it has tightened enough to return inflation to 2%.
Stock futures rose and bond yields fell, with
traders looking past the Federal Reserve’s effortsto downplay the market’s dovish bid ahead of a key reading on consumer sentiment.
Key: 블룸버그에 추정치를 제공한 65개의 하우스 중 오직 8개 하우스만 핵심 물가 지표의 전월 대비 증가가 +0.2%에 그칠 것으로 예상했음.
Only 8 among 65 forecasters in Bloomberg’s survey anticipated a 0.2% core monthly CPI increase.
Only 8 among 65 forecasters in Bloomberg’s survey anticipated a 0.2% core monthly CPI increase.
Horizon: 미국 중앙은행이 원하는 물가 목표치에서 여전히 멀지만, 핵심 물가 지표가 전년 대비 4% 증가에 그친 것은 2021년 9월 이후 가장 적은 증가율임.
The 4% year-on-year increase in core prices is the smallest since September 2021. We are still quite some ways from the Fed’s target, but there’s at least some incremental progress.
The 4% year-on-year increase in core prices is the smallest since September 2021. We are still quite some ways from the Fed’s target, but there’s at least some incremental progress.
Rates: 물가 지표 이후 금리시장의 가격 반응은 i) 중앙은행의 금리인상 주기가 막을 내렸으며, ii) 내년 금리인하 폭을 100bp(4회)에 가깝게 책정하고 있음.
The rate market is signaling that the tightening cycle has effectively ended, with the OIS market pricing in a mere 12% chance of a hike by January. Meanwhile, they’ve priced in rate cuts of about 92 bps by December 2024.
The rate market is signaling that the tightening cycle has effectively ended, with the OIS market pricing in a mere 12% chance of a hike by January. Meanwhile, they’ve priced in rate cuts of about 92 bps by December 2024.
Implication: 중앙은행의 정책금리에 현재의 물가 추세를 대입하면 실질 정책금리는 1.50%가 됨. 만일 이대로 물가가 지속 하락 할 경우 중앙은행은 실질 정책금리가 너무 높은 것을 상쇄하기 위해 금리인하를 해야 한다는 사실에 시장 참여자들은 베팅 중인 것임.
With inflation falling, the real fed funds rate is tightening. Using Core CPI at 4%, the inflation-adjusted policy rate is at about 1.5%. Should inflation continue to cool next year, the Fed may need to bring the rate down to offset the tightening of the real rate. That’s what the market is betting on.
With inflation falling, the real fed funds rate is tightening. Using Core CPI at 4%, the inflation-adjusted policy rate is at about 1.5%. Should inflation continue to cool next year, the Fed may need to bring the rate down to offset the tightening of the real rate. That’s what the market is betting on.
“The CPI print suggests ‘higher for longer’ might not be as long as some feared.”
UK inflation tumbled to the lowest level in two years, prompting investors to firm up bets that the Bank of England will be able to cut rates as early as the Spring of next year.