USD: Wrestling with the bond bear market
Right now, the US bond market is the epicenter of global financial markets, and bond investors are eagerly awaiting Fed Chair Powell's semi-annual monetary policy testimony on Tuesday. His challenge would be to show confidence, but not too much confidence, in the recovery, so that the slide in the bond market turns into a crash. The Fed usually finds the right terms on these occasions, most likely downplaying the upcoming inflation increase to 2Q, so that the fall in the bond market will possibly remain orderly. In the week ahead, US data should be a small upward revision to the 4Q20 GDP figure and then personal income numbers on Friday, January. This is anticipated to hop on the back of stimulus cheques, but by now it should be priced in. We can also see the favored inflation indicator of the Fed, the core PCE deflator, predicted to be found in January around 1.4/1.5 percent YoY. Some progress on the US$1.9trn fiscal stimulus bill can also be made in the coming week, where a vote could go to the House floor on Friday. All in all, this indicates a tough week for bonds and probably some additional dollar help.
No comments:
Post a Comment