US Fed officials have signaled a rapid balance sheet run-off - something which came out from speeches - from the Federal Open Market Committee (FOMC) minutes. There is not just one 50 basis points (bps) hike but perhaps more than a few, which the market is pricing in.
The dollar has broadly gained through the course of the last week, equities and oil prices have retraced. Asia isn’t doing anything great. As of now, things are in search of direction.
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The 2-year yields, the 5-year yields, the 10-year yields and 30-year yields have all continued their journey up. Even now, treasury futures in Asian trade are higher sharply. The 2-year was up 5 bps, the 5-year was up 19 bps and the 10-year was up 32 bps. These are nominal values but even the real yields have moved up almost in equal measure. The market is repricing expectations of what central banks will do, in this case the US Fed will do very quickly.
Watch the accompanying video of CNBC-TV18’s Prashant Nair for more details.
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