We have had the night to digest the Fed rate hike and the accompanying changes in the summary of economic projections. As I wrote yesterday, the move to a fourth hike was balanced on a knife's edge. In the last go round, it was 8 to 7 in favour of 3. This time it is 8 to 7 in favour of 4 hikes.
Below are just a few thoughts on where we are headed next.
Still moving toward my 25 basis point bogey
The thing that most interests me here is how markets react. And we have seen is a narrowing of interest rate spreads to below 40 basis points between 2- and the 10-year Treasuries. At the same time, the 10-year Treasury bond remains anchored below 3%, with all of the tightening feeding into the front end of the curve.
I have been saying that after this rate hike announcement, I expected the curve...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.