Federal Reserve Chairman Kevin Warsh’s commitment to lowering inflation bolsters the Fed’s credibility, supporting long-dated Treasury yields and a lower term-premium, according to Citadel Securities.
Trading in the $31 trillion US Treasury market since last week’s Fed meeting has been defined by relatively more stable long-dated yields versus the policy sensitive two-year sector, and “a hyper-credible Fed should be good for long end rates,” wrote Nohshad Shah, the firm’s head of EMEA fixed-income sales.
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