BlackRock Inc., the world’s biggest money manager, is warning bond investors they’re not prepared for the Federal Reserve to raise interest rates.
Traders see about a 48% chance the Fed will act this year, down from 93% on Jan 1, futures show. A rout in stocks and oil led investors to abandon bets on higher rates, even after policy makers indicated in December they’d move four times in 2016. Now equities and crude are showing signs of stabilising, and economists project the central bank’s preferred inflation gauge on Feb 26 will show a pickup.
“Will the central bankers wait out all of 2016?” Russ Koesterich, the global chief investment strategist for New York-based BlackRock, wrote in a report Monday. “Probably not, yet this is exactly what the futures market is suggesting. Inflation has strengthened, suggesting that the central bank may not be quite as dovish as the market expects.” The company has US$4.6 trillion ($6.5 trillion) in assets.
US 10-year note yields rose three basis points, or 0.03 percentage point, to 1.78% as of 8.12am New York time, according to Bloomberg Bond Trader data. The 1.625% security due in February 2026 dropped 7/32, or US$2.19 per US$1,000 face amount, to 98 5/8.
Twelve months ago, Koesterich said the outlook for a Fed rate increase in 2015 was “some chance for June, probably September, if not, you know certainly by the end of the year.” The central bank acted in December.
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Traders see about a 48% chance the Fed will act this year, down from 93% on Jan 1, futures show. A rout in stocks and oil led investors to abandon bets on higher rates, even after policy makers indicated in December they’d move four times in 2016. Now equities and crude are showing signs of stabilising, and economists project the central bank’s preferred inflation gauge on Feb 26 will show a pickup.
“Will the central bankers wait out all of 2016?” Russ Koesterich, the global chief investment strategist for New York-based BlackRock, wrote in a report Monday. “Probably not, yet this is exactly what the futures market is suggesting. Inflation has strengthened, suggesting that the central bank may not be quite as dovish as the market expects.” The company has US$4.6 trillion ($6.5 trillion) in assets.
US 10-year note yields rose three basis points, or 0.03 percentage point, to 1.78% as of 8.12am New York time, according to Bloomberg Bond Trader data. The 1.625% security due in February 2026 dropped 7/32, or US$2.19 per US$1,000 face amount, to 98 5/8.
Twelve months ago, Koesterich said the outlook for a Fed rate increase in 2015 was “some chance for June, probably September, if not, you know certainly by the end of the year.” The central bank acted in December.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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