Listen: Fed, US And Powell discussed on Biz 1190 Overnight featuring Bloomberg Radio
"Good luck fifty percent chance economy performs faster or maybe. Inflation picks up a little bit more than we expected. I think we're position to adjust to that. I think we're also well positioned to adjust our path of interest rates if if the economic data disappointing Manas, Scott more with axiom has alleviate dossier on Wednesday. What is going on his flight to safety mode? That's happened ever since September actually where in the past ten years people have had very little reasons to have to hold onto bombs, and they have now you've also seen some of the weaker segments of the bond markets like the high yield of the emerging market debt. Those spreads have doubled a triple because of US interest rates and the strength of the dollar. So that also becomes a nun. No, go zone for them. So treasuries is really what's what's left, and we're seeing a lot of that rebalancing going into there, and it may be very temporary because a flight to safety usually happens in what's your once? You've rebalanced you've rebalanced you don't need to push any further. It's certainly not something that the fed. Is orchestrated. And in fact, they're planning more hikes at least one in this month, and maybe another one next quarter there shouldn't be an inversion by design. But. Bond. Markets are nervous that way. And there are so many risk factors around that could push the economy one way or another. Everybody's going into twenty nineteen with three scenarios of base Casey investigates, which is inflationary in a worst case, which is deflationary, and as you just heard from the fed day. Probably also have these three these three scenarios because they're having just as much. Like, I said the I have run the research. Yes. We've inverted threes FIS inverted yesterday. But they looked at the one year forwards on the ten thirty s and the twos. Tons and that's what the GT library, and they would maintain that the market is not pricing a sustained in virgin you have this flattening. But then we get a spike. And would you agree with that that it is a temporary phenomenon? A not a recession hard indicator. I would agree. And I would also say that, you know, pop out of the feds common going when Powell gave that speech a few weeks ago about being very close to neutral. I think it's important to understand that the Fed's idea of neutral isn't a line in the sand. Isn't something fixed number. It is whatever the economy can can can take whatever is not either seen as as strict or or or promoting gross and that fluctuates with the strength of the economy. And I saw I read the Powell's speech is being the fed is less confident about economic growth now than they were a year ago. Up next. How is Barclays Japan planning to weather the storm currently engulfing markets we hear from its chairman next.."