Home World News Will US bond yields fall after Ball opens his mouth?Analysts say they are repeating the same old tune: It is important for the Fed to strive for balance

Will US bond yields fall after Ball opens his mouth?Analysts say they are repeating the same old tune: It is important for the Fed to strive for balance

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Will US bond yields fall after Ball opens his mouth?Analysts say they are repeating the same old tune: It is important for the Fed to strive for balance

Chairman of the Federal Reserve (Fed)ballOn the 3rd, it was reiterated that although the US economic boom was stronger than expected and the inflation rate in January and February was higher than expected, the Fed’s expectation that inflation will remain cool remains unchanged and there will still be some growth this year.cut interest ratesSpace.In general, Ball’s latest speech is a repetition of the same old tune, but it does play a role in calming the market.YieldOn the 3rd, it fell from its highest point and US stocks also closed in the red.

Ball said in a speech at Stanford University on the 3rd: “Recent data… have not significantly changed the overall outlook, which is that growth remains solid, the labor market is strong but rebalanced, and inflation “The path to decline, though bumpy, is still sliding toward 2%.”

Analysts noted that Ball’s comments on the 3rd reiterated the economic and inflation outlook that investors are already familiar with, emphasizing that the Fed’s decision-making is based on data. As long as the Fed is confident that inflation will remain under control, it will lower interest rates this year. The mistake Ball least wants to make is to cut interest rates before the time comes, which would not only undo previous efforts to significantly raise interest rates to curb inflation, but also lead to a resurgence of inflation. And will seriously damage the Fed’s credibility.

Ahead of Ball’s speech, the Institute for Supply Management (ISM)’s services industry price index fell to its lowest level in four years, reducing concerns about rising inflation and adding to Ball’s statement as the latest evidence that this There may be a cut in interest rates this year. This year, US economic data has been stronger than expected, raising the possibility of a “non-landing” economy, reducing market expectations of a Fed interest rate cut this year, and US government bond yields have risen accordingly. happened.

However, in his speech on the 3rd, Powell maintained his position that “inflation is moving towards the 2% target” and “expects an interest rate cut this year”, which relieved the market that the change in outlook. Was worried about. Interest rate cut. Analysts noted that the lack of any “hateful” words in Ball’s speech was enough to reverse the bond market trend.

According to CME Group’s FedWatch website, Wall Street expects the probability that the Fed will initiate an interest rate cut at the June regular meeting has increased to 62.3%, up from 58% on the 2nd, but still 73%. is less than. % of one month ago.

The US 10-year Treasury yield rose above 4.42% intraday on the 3rd, the highest level since November last year. However, Ball’s speech eased market concerns about interest rates “remaining high for too long”, and 10-year yields fell in response. Stay within the recent range. The American S&P 500 index also closed in the red.

Analysts believe the focus of recent public comments from Ball and other Fed policymakers is, in essence, on “balancing.” Ball acknowledged that if an improvement in inflation allows for a rate cut, the priority is deciding the right time to cut the rate. Cutting interest rates too late increases the risk of recession; Cutting interest rates too quickly could undermine the Fed’s credibility in stabilizing prices.

Next, the market will focus on the US March non-farm payrolls report released on Friday (5th), which is the next key indicator that may affect the Fed’s evaluation. Economists estimate nonfarm employment may have increased by 200,000 people in March, slower than 275,000 people in February.

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