Current Fed policy and government actions have steered the economy through significant change with little understood and disruptive risks percolating under the surface. But boy does it set the future up for a nasty surprise.
The Fed just raised the Fed Funds rate by 25 bps to 1.25%. However, long term rates rallied by 50 bps! Mohamed A. El-Erian, bond market veteran and specialist wrote today that the Fed should continue to raise rates “and that policy makers should take seriously the growing risk of future financial instability, especially in the absence of a carful normalization”.
uber-dovish Federal Reserve Bank of Boston President Eric Rosengren said that the era of low interest rates in the United States and elsewhere poses financial stability risks and that central bankers must factor such concerns into their decision making process.
The bond market is on fire and you are about to get burned!!!The Fed will raise interest rates in two days.The US Treasury Secretary Mnuchin just repeated he is looking into issuing ultra-long bonds (great timing).