Will the Fed drop any hints on rate rises?

{"text":[[{"start":12.38,"text":"Despite this week’s rally in US Treasuries, investors fear the recent global bond sell-off is far from over, with traders looking to the Federal Reserve’s policy meeting and press conference on Wednesday for clues about the path of interest rates. "}],[{"start":25.51,"text":"Traders in futures markets are pricing just a 9 per cent chance of a rate rise at the October meeting but anticipate between two and three quarter-point rises by the end of 2027, according to LSEG data. "}],[{"start":37.44,"text":"Although US inflation came in higher than expected in September, many investors believe raising interest rates would do little to curb price pressures driven by soaring energy costs. "}],[{"start":47.62,"text":"“We don’t think they’re going to raise rates,” said Rob Waldner, chief investment officer at Invesco Fixed Income. "}],[{"start":54.41,"text":"“There’s no real inflation problem. "},{"start":56.727,"text":"There’s a price problem in commodities and oil, but raising Fed rates doesn’t solve the Iran war. "},{"start":61.857,"text":"It doesn’t create more oil. "},{"start":63.649,"text":"It doesn’t solve the diesel problem with refineries,” he added. "}],[{"start":68.07,"text":"The lack of forward guidance from new Fed chair Kevin Warsh is also expected to fuel volatility in the Treasury market, as investors struggle to gauge the central bank’s next moves. "},{"start":77.512,"text":"Meanwhile, concerns over US government spending have kept longer-term borrowing costs elevated. "}],[{"start":83.83999999999999,"text":"“We’ve introduced more risk premium and more volatility to the market,” Waldner said. "},{"start":88.73199999999999,"text":"“We think the yield curve will steepen, and you’ll probably get more risk premium on the long end of the curve. ”"},{"start":93.987,"text":"Michelle Chan "}],[{"start":95.69999999999999,"text":"

How close is the ECB to taking action on France?

"}],[{"start":100.13999999999999,"text":"The European Central Bank’s October decision on interest rates is the part that is least in doubt before Thursday’s meeting of the governing council. "}],[{"start":108.12999999999998,"text":"Traders and analysts take it almost for granted that policymakers will leave the deposit rate unchanged at 2.5 per cent after raising it by a quarter point in June and again in September. "},{"start":117.95899999999997,"text":"LSEG data shows that markets are pricing just a 9 per cent probability of a rate rise next week. "}],[{"start":124.44999999999999,"text":"Harder to predict will be any indication of the ECB’s view on the situation in France, where 10-year government bond yields have risen above 5 per cent, the highest in more than two decades and some 1.7 percentage points above Germany’s. "}],[{"start":137.91,"text":"ECB watchers are pondering two questions. "},{"start":140.964,"text":"Will the rise in market rates delay further rises in policy rates, given that inflation is still on an upward trajectory? "},{"start":147.41899999999998,"text":"And how close is the ECB to buying French bonds to calm down the turmoil? "}],[{"start":152.12,"text":"Traders on swaps markets have dialled down their bets on another quarter-point interest rate move this year, which was fully priced earlier this month, to about a 66 per cent chance. "}],[{"start":162.39000000000001,"text":"Holger Schmieding, chief economist at Berenberg, said the “creeping crisis” in France “strengthens the case for staying on hold”. "}],[{"start":169.9,"text":"He cautioned against expecting any imminent ECB intervention in bond markets. "},{"start":174.542,"text":"“The ECB has no mandate and no appetite to fund French fiscal follies,” he wrote in a note to clients, adding that the central bank “would only support France if Paris returns to more sustainable policies”. "},{"start":185.284,"text":"Olaf Storbeck "}],[{"start":187.56,"text":"

Will the BoJ look through high oil prices?

"}],[{"start":190.78,"text":"After weeks of careful messaging, the Bank of Japan has left markets expecting no rise in interest rates at the two-day monetary policy committee meeting that ends on Friday. "}],[{"start":199.97,"text":"While officials have indicated that they see a risk of underlying inflation exceeding the BoJ’s 2 per cent target, analysts say the threat has not been presented as urgent despite pressure from the recent surge in oil prices and the prospect of levels remaining high for the rest of 2026. "}],[{"start":214.99,"text":"After raising its policy rate to 1.25 per cent at its meeting in September, “the BoJ has no need to conduct consecutive rate hikes”, said economists at Goldman Sachs. "},{"start":224.70700000000002,"text":"However, some analysts expect Hajime Takata, who is viewed as the most hawkish of the board members, to propose a rate rise next week. "}],[{"start":233.21,"text":"Investors’ chief focus at the meeting will be on how clearly the MPC supports market expectations that it intends to raise interest rates by another quarter percentage point at its next meeting in December. "},{"start":243.55200000000002,"text":"The sharp sell-off in the US and Japanese equity markets, said Citigroup FX strategist Osamu Takashima, meant governor Kazuo Ueda’s comments were unlikely to be too hawkish. "}],[{"start":254.59,"text":"Accompanying the rate decision will be the BoJ’s October outlook report. "},{"start":258.657,"text":"Some analysts expect the core consumer price inflation forecast to be adjusted downwards for the remainder of the financial year ending March 2027 but adjusted upwards for the following year because of an expected resurgence in oil prices. "},{"start":271.012,"text":"Leo Lewis "}],[{"start":272.24,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1792993262_9708.mp3"}