Great expectations Great expectations\images\insights\video\mountains-machu-picchu-small.jpg June 3 2022 June 3 2022

Great expectations

Watch for maximum hawkishness from the Fed.

Published June 3 2022
My Content
Video Transcript
Question: What are your expectations for the June and July FOMC meetings?
R.J. Gallo: We expect the Fed to produce another 50 basis point hike at each of its next two meetings. They pretty much have told us that's what they're going to do. So for now, they're moving in larger increments to get the Fed funds rate up. They have communicated to the markets through their speeches, through their dot plots, et cetera that the Fed is going to be tightening extensively, and bond markets have repriced on those expectations. There's a reason why the Treasury yield curve is about one and a half to 2% higher in yield, 200 basis points higher in yield than it was at the end of last year. It's because the Fed has turned max hawkishness to fight the high inflation problem.
Tags Monetary Policy . Inflation .

Views are as of the date above and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector.

Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.  In addition, fixed income investors should be aware of other risks such as credit risk, inflation risk, call risk and liquidity risk.

FOMC is the Federal Open Market Committee.

The Federal Reserve “dot plot” maps out policymakers’ expectations for where interest rates could be headed in the future.

Yield Curve: Graph showing the comparative yields of securities in a particular class according to maturity. Securities on the long end of the yield curve have longer maturities.

Federated Investment Management Company