A deteriorating inflation situation and concern about the Federal Reserve'sFederal Reserve's power to make it better prompted the U.S. central bank officials to rally around an outsized interest rate increase and a firm restatement of its intent to control prices, according to minutes of the June 14 -- 15 policy meeting.
The minutes stated that the near-term inflation outlook had deteriorated since the time of the May meeting, justifying the 0.75 percentage point increase, the first since 1994, and a move to restrictive monetary policy, according to the data released in the days prior to the session.
At the policy meeting later this month, participants judged that an increase of 50 or 75 basis points would be appropriate, a show of unanimity that has erased typical fault lines between inflation hawks and doves. BONDS: The yield on the 10 year Treasury note went up to 2.9096%. The 2 year note yield rose to 2.9466%
DOLLAR: The U.S. dollar index was up 0.52%, up 0.52%.
They talked about 50 to 75 basis points if that's where they were last month, I've got to believe they're at 50 now. Since they met last time, there has been a lot of change. Commodity prices from industrial to agriculture to energy have collapsed. Breakeven rates across the yield curve have fallen. Not only that, but bond yields have fallen. There's a strong message coming from the economy and the bond market and the commodity market that this seems to be working and maybe the Fed would want to think about slowing down. I think the Fed is sticking to the game plan but they are aware of the softening economy and the impact higher interest rates and inflation are having on consumers. They cited some signs of a slowdown. They are aware that growth may be slowing down. It continues as she goes until we see another month or two of data. Markets haven't done much of anything. We are pretty much flat for the day. People are looking for things that have done well in a slowdown.