Fed Hikes Seen Starting With Yield Curve Flattest in Generation
The bond market was sending a message, and it wasn’t one most people, fixated on the inflation rate, expected to hear: that inflation was nothing to worry about. Of course, that contradicts what Federal Reserve Chairman Jerome Powell told Congress on Dec. 1, when he changed course and conceded that inflation, which has been running well above the Fed’s target, may not be a temporary phenomenon. The bond market’s reaction suggests that it’s no joke. “The bond market is starting to tell you that there is not this urgency to raise rates quite as much,” says Andrew Slimmon, senior portfolio manager at Morgan Stanley Asset Management.