Posted 5 hours agoSharePrint
Wall Street could see more volatility during a very busy trading week that is filled with a wrath of central bank decisions, surging international COVID-19 cases, solid economic data, effects of stimulus working its way through the economy, and pent-up consumer demand. Financial markets are edge, especially considering how quickly stocks sold off following news of the White House plans for capital gains tax. A lot of the good news has been priced in for the US and some investors are focusing on Europe’s recovery potential.
The Fed will likely stay the course at the April policy meeting. The Fed will have to become even more optimistic given the better-than-expected vaccination rollout and improvement in the labor market. The Fed will stick to the script that the recovery is incomplete and that more support is warranted. Greater clarity that they will tolerate most inflation for the rest of the year could provide what the bond market needs to
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Week Ahead: Rising Treasury Yields will make this an interesting FOMC decision
March 12, 2021SharePrint
The bond market seems determined to make this an interesting FOMC policy decision. Treasury yields have been surging after the Biden administration passed the $1.9 trillion COVID relief bill and set a May 1
st goal of getting vaccines to all adults. The Fed welcomes a steeper yield curve, but the current trajectory could be disruptive to the economic recovery. Market participants want to know how quickly do yields need to rise to raise concerns of tighter conditions or trigger disorderly markets? The taper tantrum might get priced in a lot sooner by Wall Street, but the Fed will patiently wait until economic indicators confirm the recovery remains much later in the year.
Week Ahead: Dollar rally continues as US yields rise
March 5, 2021SharePrint
The taperless tantrum could continue across financial markets now that it seems clear Fed Chair Powell won’t react until he sees disorderly market conditions or if financial conditions tighten further. Positive economic, such as this past employment report might continue to fuel optimism about the economic outlook and that could raise expectations that the Fed will raise rates sooner.
US
Financial markets will have their hands full trying to balance the impact on another massive relief bill, an improving labor market, and a bond market selloff that appears to have no signs of slowing down. The dollar has been running wild following the move in Treasuries and most signs are suggesting that move could continue.