Central Bank Watch: Fed Speeches, Interest Rate Expectations Update

[MongiIG]

Jul 7, 2022 | DailyFX
Christopher Vecchio, CFA, Senior Strategist

CENTRAL BANK WATCH OVERVIEW:

• Rates markets are still pricing in a 75-bps rate hike by the Federal Reserve later this month.
• However, a decline in US Treasury yields may be a reflection of markets pricing in ‘peak’ Fed rate hike odds: rate cut potential is building for the second half of 2023.
• Recent US Dollar strength is less about what the Fed may do and more about problems facing other currencies.

 

RATE HIKES ARE COMING
In this edition of Central Bank Watch, we’ll review comments and speeches made by various Federal Reserve policymakers since the June FOMC meeting. After raising rates by 75-bps in June, there has been a consistent tone by Fed policymakers: more rate hikes are needed; more rate hikes are coming; and inflation is the top priority – even if it means a recession.