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Christopher Waller stood up at a Reuters event Thursday and paraphrased John Lennon at a room full of bond traders. "Give disinflation a chance," the Fed governor said. "We can wait one meeting." Somewhere a rates desk put down its sandwich.
Stocks took it as a gift. At noon, the S&P 500 had climbed just over 1%, the Nasdaq 1.4%, and the Dow tacked on 640 points for a 1.2% gain and its best session since Aug. 4. The 10-year Treasury yield eased to about 4.75% after spiking Wednesday.
The Fed's benchmark, the overnight rate it charges banks to borrow from each other, currently sits in a range of 3.50% to 3.75%, and markets have spent weeks bracing for it to go higher on Sept. 16. Higher rates make a boring government bond paying you nearly 5% look awfully good next to stocks so we can forgive the equity jockeys who have been deprived of good news for a few moons from getting a little giddy when Waller signaled he'd hold if August inflation behaves and knocked hike odds from 63.2% to 50.4%, per CME FedWatch. Even if those traders are rejoicing on what's basically now a coin flip.
July's vote was 9 to 3 to hold, with Beth Hammack in Cleveland, Neel Kashkari in Minneapolis, and Lorie Logan in Dallas all wanting a quarter point more, the most dissents at a single meeting since 2016. Not one governor joined them. Warsh, for all his talk about inflation being a choice, has voted to sit still both times he's run the room.
#next #bond #traders
Christopher Waller stood up at a Reuters event Thursday and paraphrased John Lennon at a room full of bond traders. "Give disinflation a chance," the Fed governor said. "We can wait one meeting." Somewhere a rates desk put down its sandwich.
Stocks took it as a gift. At noon, the S&P 500 had climbed just over 1%, the Nasdaq 1.4%, and the Dow tacked on 640 points for a 1.2% gain and its best session since Aug. 4. The 10-year Treasury yield eased to about 4.75% after spiking Wednesday.
The Fed's benchmark, the overnight rate it charges banks to borrow from each other, currently sits in a range of 3.50% to 3.75%, and markets have spent weeks bracing for it to go higher on Sept. 16. Higher rates make a boring government bond paying you nearly 5% look awfully good next to stocks so we can forgive the equity jockeys who have been deprived of good news for a few moons from getting a little giddy when Waller signaled he'd hold if August inflation behaves and knocked hike odds from 63.2% to 50.4%, per CME FedWatch. Even if those traders are rejoicing on what's basically now a coin flip.
July's vote was 9 to 3 to hold, with Beth Hammack in Cleveland, Neel Kashkari in Minneapolis, and Lorie Logan in Dallas all wanting a quarter point more, the most dissents at a single meeting since 2016. Not one governor joined them. Warsh, for all his talk about inflation being a choice, has voted to sit still both times he's run the room.
#next #bond #traders
8 days ago
