The Fed meeting dominates fixed income investors’ attention this week as they feel the pressure of figuring out how rates will behave in the 2H of 2021.
As the globe continues to recover from the pandemic, investors need to contend with elevated economic expectations and the uneven recovery we may experience.
The Fed PR campaign around the U.S. CPI data was effective in helping to keep rates relatively unchanged this week, but geopolitical forces helped as well.
Rates are being influenced by many factors though one of the main concerns is the pace of global growth and pandemic recovery, particularly as European activity has been slower to rebound.
Chairman Powell committed, once again, to low rates this year and the J&J vaccine pause led to rate volatility, and ultimately, flattening of the yield curve.