BlackRock’s Rick Rieder Favors Bonds Over Stocks as Treasury Yields Surge 
BOJ Raises Interest Rate to 31-Year High as Yen Weakens 
Fed’s Hammack Says Bond Yield Surge Is Not Driven by Inflation Fears 
RBA Set for September Rate Hike as Inflation Stays High 
Fed’s Williams Signals One More Rate Hike Before Year-End 
ECB May Stop Rate Hikes After December, Capital Economics Says 
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After yesterday’s data releases, investors have become more concern over an imminent slowdown in the U.S. economy amid geopolitical uncertainties around the world and repriced hike probabilities sharply. The global stock market turmoil has also pushed investors to the safety of Treasuries, pushing the yields significantly lower and flattening the yield curve.
- Investors are currently pricing a rate hike by the U.S. Federal Reserve in December with just 75 percent probability, compared to 83 percent a week ago.
The repricing was even sharper for next year.
- The first rate hike for 2019 is now priced in July and with 53.1 percent probability. No other rate hike is priced for next year, though the U.S. Federal Reserve has projected two rate hikes as of FOMC documents from the September monetary policy.
There was plenty of news over the past month of a slowdown in the in the housing sector, with new home sales growth at negative and price hovering at record highs amid higher rate of mortgages. The ADP employment report also suggested that the labor market has somewhat cooled in November, with just 179,000 jobs created. At the same time, U.S. jobless claims have reached the highest level in six months.
