PrefBlog

James Bullard of the St. Louis Fed gave an exciting presentation today:

KEY THEMES

• • Global trade disputes may be more protracted and more difficult to resolve than previously envisioned.
• • The U.S. economy is expected to grow more slowly in 2019.
• • Inflation expectations appear to be too low to be consistent with the inflation target of the Federal Open Market Committee (FOMC).
• • The Treasury yield curve has moved more decisively toward inversion.
• • These considerations suggest a downward adjustment in the policy rate—the federal funds rate target range—may be warranted soon.

The New York Times reported:

The broader S&P 500 index was down slightly, but investors remained watchful of developments on the trade front, after stocks suffered their sharpest monthly decline this year in May with a 6.6 percent drop. That nervousness lingered in the bond market Monday, with the yield on 10-year Treasury bonds falling, suggesting that investors increasingly believe trade tensions could hinder world economic growth.
…
But stocks were bolstered in part by rising expectations that the Federal Reserve could start cutting interest rates in response to the rising trade tensions. In a prepared statement, St. Louis Federal Reserve President James Bullard on Monday said lower Fed rates “may be warranted soon.”

The five-year Canada yield dropped 7bp to 1.29%, which caused some late-afternoon weakness in the Canadian preferred share market.

This entry was posted on Monday, June 3rd, 2019 at 6:52 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.