Monday, June 17, 2019
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Bond yields fall after consumer prices turned out lower than expected, negating inflation fears

Recent employment reports have contributed to the now widely accepted view that the labor market is close to or above full employment and has accelerated wage growth. This could be a concern for the Federal Reserve, which is trying to stem inflation.

Although consumer prices were lower than expected, pressure should not affect market expectations for a fourth rate hike by the Federal Reserve before the end of the year.

"CPI was a failure, but it does not necessarily indicate broader inflationary trends," said George Goncalves, head of fixed income strategy at Nomura Securities International. "As the Fed keeps track of this information over the months, they get mixed readings, so they do not stop it, they make their way to their neutral rate."

At 9:26 am CET, expectations for an increase in their December meeting held about 78 percent, according to the FedWatch tool of the CME group.

Stock markets around the world collapsed on Thursday. Asia-Pacific stocks saw a sharp decline in markets in the region, while European equities fell in the morning trade. In the US, futures trended after a sharp decline in the previous session, with the Dow closing more than 800 points.

The markets were nervous as interest rates continued to rise. US Treasury yields declined somewhat on Wednesday after the benchmark's 10-year Treasury yield hit a new seven-year high and the 30-year bond yield hit a high that has not risen since 2014.

Concerns over rising interest rates continue to cause nervousness among investors, as strong economic data raises uncertainty about what this could mean for the future of US monetary policy and thus the economy.

On the auction front, the US Treasury will auction $ 15 billion in 29-year and 10-month bonds.

In connection with this issue, President Donald Trump criticized the Federal Reserve on Wednesday, saying that the US Federal Reserve was "making a mistake" by further raising interest rates.

"The problem I have is with the Fed, the Fed is going wild, I mean, I do not know what their problem is, they're raising interest rates and it's ridiculous," Trump continued, in a separate telephone interview to say Fox presenter Shannon Bream. No speeches by the Fed are scheduled for Thursday.

"The locomotive: that was a new one," added Goncalves of Nomura. "I do not care much about it, the Fed will continue to do what it takes to keep the economy from overheating, and they're just trying to get the fatigue out."

"If they do not lean against it, it can be much worse later."

Alexandra Gibbs
contributed reporting.



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