[뉴욕=뉴스핌] Correspondent Hwang Sook-hye = Wall Street is voicing in the opinion that it is difficult to expect any’surprise’ at the Federal Open Market Committee (FOMC) in March.
It is said that policymakers, including Fed Chairman Jerome Powell, will not respond to the rise in market interest rates, which has spread to five years, starting with a long term, at a two-day monetary policy meeting on the 16-17th.
Furthermore, there is a possibility that the so-called’chicken game’ between the Fed and the bond market will rise further after the FOMC this month.
The rise in interest rates since mid-February reflects the economic recovery, and the Fed’s position that it will endure until inflation far exceeds the target of 2.0% has been reaffirmed, while bond traders consistent with government bonds are more inconsistent. It is expected to heat up.
Market experts told the Fed to raise interest rates on so-called Operation Twist (OT) and overpayment reserves as the New York Stock market hit a measles last week, as the NASDAQ market entered a correctional market last week as government bond yields jumped sharply around 10-year and 30-year bonds We are pressing to respond positively.
However, after Powell’s speeches to Congress and the Wall Street Journal (WSJ) conference were passive, interest rate hikes spread to five years.
While yields on 2-year Treasury bonds, which are most sensitive to policy rate fluctuations, remain stable, yield curve stiffening also spreads widely from 2-year and 10-year bonds to 2-, 5- and 7-year bonds.
The 5-year Treasury bond yield rose to 0.84%, approaching the highest since last year, and for this reason, the spread of 5-year and 30-year bonds, which had reached the highest level in 6 years, reached 150bp in February. Retreated.
However, Wall Street is predicting a scenario where the spread rises again. TD Securities issued a report, asserting that the 146.5bp 5-year and 30-year spreads were an opportunity to buy, and warned that the figure could widen to 170bp.
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| Jerome Powell Chairman of the Federal Reserve System (Fed) [사진=로이터 뉴스핌] |
In September of last year, the Fed introduced the average price target system and announced its intention to maintain a zero interest rate policy until the end of 2023, and it is not backing down despite expectations of rising inflation and a surge in market interest rates since the beginning of the year.
On the other hand, the expected timing of interest rate hikes in the bond market and IB industry is steadily getting ahead. According to major foreign media, market experts are expecting the Fed to raise interest rates in the first half of next year.
In the report, Allianz said, “The resumption of economic activity following the supply of $1.9 trillion in stimulus and vaccines will inevitably raise the forecast for inflation and growth.” Insisted.
According to the Market Watch that day, the US Treasury bond market’s inflation forecast after 10 years jumped to 2.3%. This is the highest in eight years. It is also a number that jumped steeply from 1.6% just before the US presidential election.
Separately, Barclays published a report and said that by March 2025, the Fed is expected to raise interest rates eight times.
Incapital’s strategist Patrick Larry told Bloomberg, “The chicken game is heating up as traders are weighing how far government bonds will jump before the Fed raises interest rates.” Will be even bigger,” he predicted.
Market experts are watching the dot plot this month. The dot plot reflecting the future benchmark interest rate forecasts of Fed members presented a scenario in which interest rate hikes do not occur until the end of 2023 at the FOMC in December of last year.
Some pointed out that interest rate rise bets have been excessive in the past month or so. The British Financial Times (FT) insisted in a column that the recent surge in market interest rates is contradicting the Fed’s policy actions as well as macroeconomic indicators.
Jamie Anderson, trading head of Insight Investments with an asset size of $1 trillion, also stressed, “The skyrocketing 5-year yield is interpreted as a sign that the bond market has gone too far.”
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| Traders on the floor of the New York Stock Exchange [사진=로이터 뉴스핌] |
While the US Treasury bond market, which is worth $21 trillion, is bursting, uncertainty in the asset market is increasing day by day.
Bridgewater Associates, the world’s largest hedge fund company, warned that risky assets could panic again as the Fed’s interest rate hikes and expectations for tapering continue.
It is said that the recent betting on the price of government bonds is similar to the’Ponzi game’, and shocks will continue on the overall asset market, including bitcoin as well as IT large stocks in the New York Stock Exchange.
In a recent report, Societe Generale argued, “It is difficult to expect the asset market to stabilize until the 10-year Treasury yield rises to 2.0%.”