The probability of the Federal Reserve cutting interest rates in the first half of the year is less than 50% for the first time! US long-term bond ETFs have experienced unprecedented eight consecutive declines
因醉鞭名马幌
发表于 2024-3-19 10:49:19
205
0
0
Prior to the release of the interest rate decisions by the Bank of Japan and the Federal Reserve this week, the US fixed income market seemed to have become increasingly anxious in advance
As the market's expectation of the Federal Reserve's interest rate cut this year continues to decrease, the yield of the two-year US treasury bond bond, which is most closely related to the interest rate expectation, climbed to the highest level since the beginning of the year on Monday. At the same time, treasury bond bond investors are also scrambling to escape the world's largest long-term bond ETF.
Market data shows that iShares 20-year and above US Treasury ETFs (TLTs) fell again on Monday, marking its eighth consecutive day of weakness - the longest consecutive decline since the fund's establishment in 2002. At present, the main long-term fund in this market has experienced capital outflows for five consecutive weeks, with a total withdrawal of up to $2 billion during this period.
This is vastly different from last year's situation, when traders invested billions of dollars in TLT because they believed that as the Federal Reserve's interest rate hike cycle came to an end, this previously heavily suppressed asset class would receive substantial returns in the future.
The significant pullback experienced by TLT at present is also at a time when risky assets are in high demand, and funds tracking stocks and cryptocurrencies are attracting funds at an unprecedented speed. The Federal Reserve will announce its March interest rate decision this week, and traders are paying attention to whether sustained inflationary pressures will force Federal Reserve officials to postpone the schedule of interest rate cuts for the year.
Overall, TLT has fallen by over 3% in the past eight trading days. Although this decline is far from unprecedented, it is worth noting that this round of decline is in line with the sustained outflow of funds - which is different from the situation in the past three years, when investors continued to buy the fund despite the sharp drop wiping out about half of its value, with about $40 billion of new funds injected into the fund.
Industry analyst Eric Balchunas pointed out, "In my opinion, this is like $40 billion in funds (the total size of LTL) tactical betting that the Fed will break something, and then continuing to hope that the Fed will cut interest rates, but neither has happened. Some people are starting to withdraw, and we may see more people withdrawing."
Last week, after a series of strong economic data releases, US Treasury yields rose almost daily, and this trend continued on Monday.
Although the overall increase throughout the day was not significant, the two-year US Treasury yield hit 4.749% overnight, the highest level since December 11 last year. The yield on 5-year US Treasury bonds rose to 4.367%, the highest since November 28th last year. In addition, the 10-year US Treasury yield, known as the "anchor of global asset pricing," also rose 1.4 basis points to 4.329%.
Dave Lutz, head of ETFs at JonesTrading, said, "People are preparing for interest rates to be 'higher and longer'. US economic data continues to show economic warming and rising inflation. The Bank of Japan will end negative interest rates, which could also drive up Japanese bond yields and drag down the US bond market."
Richard Bernstein Advisors fixed income director Michael Contopoulos said, "There is still too much liquidity. Financial conditions are becoming more relaxed, unemployment rates are low, inflation is high, corporate profit growth is accelerating, and speculative activity is rampant. This is not an environment conducive to interest rate cuts."
The probability of the Federal Reserve cutting interest rates for the first time in the first half of the year is less than 50%
It is worth mentioning that as industry expectations for the Federal Reserve's interest rate cut this year continue to weaken, traders in the interest rate swap market on Monday once estimated that the possibility of a rate cut in June was less than 50%. This is also the first time people are more convinced that the Federal Reserve will find it difficult to achieve a rate cut in the first half of the year
Specifically, the pricing of the swap linked to the Federal Reserve's June meeting was once close to 5.21%, which is less than half of the current federal funds rate of 5.33%, even less than 25 basis points. This also means that the probability of a June rate cut priced by traders is less than 50%. Since July last year, the target range for the US federal funds rate has remained at 5.25% -5.5%.
Federal Reserve decision-makers have scheduled a two-day policy meeting to end on Wednesday local time. Although the industry expects the meeting to maintain the target interest rate range unchanged, the new quarterly forecasts made by Federal Reserve officials on economic and monetary policy will be highly anticipated. The December interest rate chart had predicted three interest rate cuts of 25 basis points this year. The higher than expected inflation data released since then has sparked speculation in the market that the new dot matrix will no longer be as dovish.
Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, pointed out, "I believe the chart will continue to maintain the expectation of three rate cuts within the year, but if they adjust their expectations, it is more likely to lean towards two rate cuts within the year rather than four."
"I believe the most important event of this week will be the Federal Reserve meeting and the content presented in their economic forecasts to guide the market to understand their views on the performance of the first quarter economic data," said Subadra Rajappa, US interest rate strategy director at Societe Generale in France.
In the investment banking industry, Goldman Sachs economists also adjusted their forecasts for the direction of the Federal Reserve's monetary policy last weekend. Goldman Sachs strategists such as Jan Hatzius stated in a report on March 17th that they currently expect to cut interest rates three times this year, instead of the original four.
Goldman Sachs strategist wrote in the report that the main reason for the downward forecast is a slight upward trend in the inflation path. However, they still expect the first interest rate cut in June, with four cuts in 2025 and the last in 2026, with the forecast for the final interest rate remaining unchanged at 3.25% -3.5%.
CandyLake.com 系信息发布平台,仅提供信息存储空间服务。
声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
猜你喜欢
- The probability of the Federal Reserve cutting interest rates in September remains 100%, as the US GDP in the second quarter exceeds expectations
- The annualized quarter on quarter GDP growth of the United States in the second quarter is 2.8%, and next week's interest rate cut is likely to fail
- How will the Federal Reserve signal a rate cut next morning if it is highly likely to remain inactive?
- Trigger the 'Sam Rule'! Trader: 100% probability of interest rate cut
- Dan Bin: 'Most likely to hit bottom this week'. The Nasdaq bull market should be a historical cycle of more than ten years
- BeiGene turns losses into profits in Q2, with product revenue increasing by 66%. The United States remains the company's largest market
- The new American car making force, which loses $32000 per car sold, maintains its annual production guidance
- Will the "summer storm" of the global market, led by the US CPI, continue this week?
- The annual global central bank feast! This week, all eyes will be focused on this' American town '
- The three major US stock indices closed with mixed gains and losses, with most large technology stocks falling. US steel fell by over 17%
-
过去一周的时间里,有关苹果微信“二选一”的话题持续霸占各个平台热搜,甚至有媒体还在微博发起了“如果苹果微信二选一,你选择iPhone还是微信?”的投票,当然结果是微信取得了压倒性的胜利。 从最新的 ...
- lub_pig
- 昨天 17:05
- 支持
- 反对
- 回复
- 收藏
-
今日,特斯拉AI团队发布产品路线图,其中,预计2025年第一季度在中国和欧洲推出完全自动驾驶(FSD),但仍有待监管批准。 自2016年以来,马斯克一直在探索特斯拉的FSD自动驾驶方案。2024年,特斯拉FSD V12 ...
- seisei
- 前天 16:32
- 支持
- 反对
- 回复
- 收藏
-
【全球市场】1、道指跌0.54%,纳指涨0.25%,标普跌0.30%。2、特斯拉涨近5%,亚马逊涨超2%。3、纳斯达克中国金龙指数涨0.88%,蔚来涨超14%。
- wishii
- 昨天 22:03
- 支持
- 反对
- 回复
- 收藏
-
【ASML CEO回应对华出口限制:会有更多应对措施】当地时间9月4日,荷兰计算机芯片设备供应商ASML首席执行官Christophe Fouquet在花旗银行的一场会议上表示,美国限制ASML对华出口是出于“经济动机”。他预计该公司应 ...
- mbgg2797
- 前天 09:15
- 支持
- 反对
- 回复
- 收藏