@jolyonThe Federal Reserve is staring down a week where keeping interest rates flat might rattle the bond market more than actually hiking them. Wall Street sees about a 76% chance of a 0.25 point increase this week, which would be the first move since July 2023. Inflation has not dipped below the Fed's 2% target, oil prices hit $100 per barrel, and U.S. deficits are running near 6.5% of GDP. Some bond investors worry that doing nothing signals the central bank won't fight inflation hard enough. That perception could force investors to demand higher yields on long-term U.S. debt, raising borrowing costs either way. BlackRock argues a new hike would hurt housing sectors without significantly slowing other parts of the economy. Higher rates usually scare investors, but staying put risks sending a message that the Fed isn't taking enough action on rising prices. The choice remains between imposing immediate economic pain or letting the bond market tighten conditions instead. Source: Reuters / Writer: Daniyal

@jolyonThe Federal Reserve is staring down a week where keeping interest rates flat might rattle the bond market more than actually hiking them. Wall Street sees about a 76% chance of a 0.25 point increase this week, which would be the first move since July 2023. Inflation has not dipped below the Fed's 2% target, oil prices hit $100 per barrel, and U.S. deficits are running near 6.5% of GDP. Some bond investors worry that doing nothing signals the central bank won't fight inflation hard enough. That perception could force investors to demand higher yields on long-term U.S. debt, raising borrowing costs either way. BlackRock argues a new hike would hurt housing sectors without significantly slowing other parts of the economy. Higher rates usually scare investors, but staying put risks sending a message that the Fed isn't taking enough action on rising prices. The choice remains between imposing immediate economic pain or letting the bond market tighten conditions instead. Source: Reuters / Writer: Daniyal