Investors Await Bond Market Moves After Shock Over Powell Investigation
US bond markets are gripped by caution after the revelation of a criminal investigation involving Federal Reserve Chairman Jerome Powell, raising fears over the independence of monetary policy and higher inflation expectations.
Investors believe growing political pressure from President Donald Trump’s administration to cut interest rates could push long-term yields higher, as traders demand greater compensation for holding Treasury securities.
Analysts warn that any erosion of confidence in the Fed’s credibility may lead to a steeper yield curve, higher borrowing costs and pressure on the housing market linked to long-term rates.
The 10-year inflation expectations gauge climbed to 2.29 percent, the highest since November, while the spread between two- and ten-year Treasuries widened noticeably.
Executives from major banks such as JPMorgan and BNY Mellon said the conflict between the White House and the Fed could ultimately lift interest rates rather than lower them.
Amid the easing cycle, investors are favoring short-dated bonds and selling longer maturities due to fiscal deficit concerns.
Observers see further room for curve steepening despite the recent relative stability in yields.
Investors believe growing political pressure from President Donald Trump’s administration to cut interest rates could push long-term yields higher, as traders demand greater compensation for holding Treasury securities.
Analysts warn that any erosion of confidence in the Fed’s credibility may lead to a steeper yield curve, higher borrowing costs and pressure on the housing market linked to long-term rates.
The 10-year inflation expectations gauge climbed to 2.29 percent, the highest since November, while the spread between two- and ten-year Treasuries widened noticeably.
Executives from major banks such as JPMorgan and BNY Mellon said the conflict between the White House and the Fed could ultimately lift interest rates rather than lower them.
Amid the easing cycle, investors are favoring short-dated bonds and selling longer maturities due to fiscal deficit concerns.
Observers see further room for curve steepening despite the recent relative stability in yields.
