Source item
Open original source ↗For those who want to be bullish on bonds, do you really want the Fed to NOT hike rates in September?
Consider:
The red line is the probability of a Fed hike on September 16th. It was above 100% until the July 29th FOMC meeting. It dived at that meeting, also dived on the employment report on August 7th, and on the CPI report this morning. It is currently 39%.
The blue line is the 30-year yield. When the probability of a hike was over 100%, this 30-year yield was 5.08%. Now that the probability of a rate hike has declined to 39%, the 30-year yield is 16 basis points higher at 5.24%.
See the thread below showing the same relationship has been in place for almost two years.
Quoted context
These are the quoted author’s words.
1/5 For almost two years, the Fed has been cutting or holding rates steady, and bond yields have trended higher. The bond market has been rejecting the Fed's cutting policy for two years. Once the Fed starts hiking, yields can peak. 🧵
biancoresearch ↗