Fed hawks butchered, cooked, devoured

Monday, 24 August 2015

Fed hawks have been eaten. For September certainly. Likely for 2015 as well. It’s now odds-on that the US tightening cycle is, in fact, already over. Friday night bonds were gobbled up everywhere. Australian short end yields fell to 1.82% almost pricing a full rate cut. Long end yields are retracing to lows:

US yields were similar though the damage there was mostly at the short end with the 2 year yield off 8%:

Markets are still pricing imminent tightening but unless something can turn oil the bid has much further to run. Australia/US spreads are stable owing to a ridiculous RBA:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.