The chairman of the Fed, Janet Yellen, tells bond market to anticipate a higher interest rate this year.
Even though the Greek bailout details as well as the falling Chinese stocks have affected the Fed’s resolve as far as interest rates are concerned, the prospects of finding a way forward in Greece coupled with an improvement in Chinese equities has helped bolster the faith that China is not facing an economic meltdown of any sort any time soon.
As per Yellen, the dollar’s strength as well as the low oil prices have impacted the United States economy and has helped it get out of the woods. But, Yellen did say that there were a few economic indicators which would help determine what the interest rate increase would be like. This includes, among other things, retail sales as well.
Christopher Sullivan, the man who overlooks $ 2.4 billion as the chief investment officer at the UN Federal Credit Union said that tightening was back in sights especially if the data received next week supports it. He said that this is exactly what Yellen wished to communicate and that the Treasury market was reflecting just that.
The Bloomberg Bond Trader showed prices going up by 0.02 % for the ten year Treasury note while the thirty year Treasury bond increase by 23 basis point. This is its highest gains in the last couple of years.
The Bloomberg United States Treasury Bond Index has reportedly reduced by 4.3 % this year. And as per data from the United States Commodity Futures Trading Commission, hedge-fund managers and big speculators have adjusted their bottom positions in order to benefit from any declines in futures for 10-year notes.
Yellen said that she felt it was appropriate at a later point in this year to start raising the federal funds rate & normalizing monetary policy as a result. She will also be meeting the congressional committees on the 15th and 16th of July in order to give her testimony on how things are going.
