2024-07-10 03:15:00 ET
Summary
- Fed Chair Powell’s testimony didn’t give away much and markets continue to price in around a 75% probability for a September cut.
- French spreads remain elevated, but issuers are returning to EUR primary markets as event risks are abating.
- The Bank of England’s short-term liquidity facility still sees rising demand.
By Padhraic Garvey, CFA | Michiel Tukker | Benjamin Schroeder
Fed remains biased towards cuts, but Powell signalled no shift in the baseline
The net market reaction is about right post the Powell statement – an edge higher in yields, on both ends of the curve. There is clearly still a Fed bias towards cuts, but beyond that, it’s very balanced, with the underlying economy seen as showing ongoing signs of relative firmness. Inflation figures were pointing to some modest further progress, but stating that "reducing policy restraint too late or too little could unduly weaken economic activity and employment" still shows the Fed’s inclination to ease policy. But Chair Powell is in no rush....
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Rates Spark: Issuers Returning After French Distraction