- Bond markets have gone overboard pricing in interest-rate increases by the Federal Reserve given all signs currently suggest that inflation threat will prove temporary, according to the chief fixed-income strategist of the world largest asset manager.
Will Google s Biggest Moonshot affect wet Planet Earth?
No The Biggest Public Graveyard In The U.S. Is Becoming a Park?
None Why Buying a Second Home Is More Popular Than Ever?
None of the out-of-practice airline pilots are making error in the air?
Why isn't the Fed rate hike path steeper than what investors are seeing today in Bloomberg Television interviews with Scott Thiel.
BlackRock strategists expect the Fed to hold its plan to increase rates in 2023, as indicated in the so-called dot plot. That s a view which runs counter to money markets that had priced an increase of about 30 basis points by September of next year as everything from supply-chain bottlenecks and materials shortages to high commodity prices spur inflation.
A global bond sale gathered pace Monday with 10-year Treasury yields extending a climb to 1.6%. Traders had boosted bets on higher rates last week to almost 50 - 50 in June, which would put the first increase right next to - or possibly even before - the time when the Fed suggested asset-purchase tapering might end.
Thiel says policy makers have a lot of room to ignore pandemic pressures.
Clearly there is a very active debate here, given the high inflation rates which are seen, said Thiel. It will be with us for some time. However, we think it will slowly ease. Chair Jerome Powell and his colleagues expect inflation to fall next year to below 40%. The Fed s staff in Washington predicts inflation will be back under 2% in 2022, according to minutes of the Federal Open Market Committee meeting released Dec. 13.
That s not to say that Thiel is telling clients to buy Treasuries. Quite the opposite. He expects the selloff to continue, though at a more measured pace and is recommending underweight exposure to interest-rate risk. There s more room for the U.S. economy to expand and yields at the current levels do not reflect this, he said.
We will see yields growing in part because we believe they are at the wrong level to begin with given the level of economic activity we have seen, Thiel said. There will still be the adjustment of interest rates, although not as violent as what we have seen in the last two weeks. None How Will Donald Trump, Elon Musk, and Gwyneth Paltrow Shortcut Your Ability to Think Rationally?
None These out of work Americans tell us Job Market Turmoil Is Anything But Transitory.
I can't see anything in real life that the science of persuasiveness was ever revealed to me.
None Jane Fraser Has a plan to unify Citigroup while Tormenting Rivals Who Remakes Trump?