The era of cheap money in the US is over after the Fed kickstarted its widely anticipated monetary tightening program by raising interest rates by 25bps this week. And there’s a lot more to come. Get your weekly $USD forecast from nickcawley1 here:
Federal Reserve chair Jerome Powell outlined the road ahead for tighter US monetary policy on Wednesday by starting a series of interest rate hikes and highlighting how the central bank will start reducing its $9 trillion balance sheet. The task ahead for chair Powell will be tricky as he tries to rein back multi-decade high levels of inflation without crimping growth in the months ahead.
The difficulty that the Fed is facing over the coming months is shown clearly by a closely watched measure of US Treasury yield expectations, the 2-year/10-year UST spread. The flatter the curve between these two US Treasuries, the greater the market expectation that growth will slow in the quarters ahead.
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