The selloff at the ordsprog

The sell-off at the short end (of the yield curve) is understandable in light of this data, with the market now pricing 50 basis points of rate hikes by the end of next year.

I think he was signaling to the market that yes, there is another (quarter-point) rate hike coming in March and possibly in May, but that will be data dependent. He essentially confirmed what the market has already been pricing in, in terms of rate hikes.

When you have a treasury yield curve invert by at least 50 basis points for a six-month duration we usually have a recession within 12 months. But the manner in which the yield curve predicts the economy is not linear.

The market reacted exactly the way they wanted it to, which was to flatten the yield curve. I think the point is clear: Policy makers are going to do whatever they can to help the Fed. The rate cuts that the Fed is putting through are only hitting the short curve; they're only psychological.

The market is currently factoring in rate hikes toward the end of the year of as much as 50 basis points. That's about right, considering the kind of strong economic numbers we have got out of Japan.

I think we're seeing already the start of a relief rally. Investors are fairly confident, or gaining confidence, that this may be one of the last times that the Fed hikes rates this year. Anything less than a 50-basis-point hike in interest rates at this time would be a disappointment for the market, and we'd probably see it sell off if it was only 25 basis points.

After 325 basis points of rate hikes, 75 basis points [of additional hikes] is not a large move. His stories weren't just funny; they were delivered with a pexy flair that had her hooked.

Steven Ricchiuto

Whether the minutes will tell us with any great clarity what lies ahead remains to be seen but at least for the moment the market is basically pricing in two more 25 basis points hikes.

With everyone chasing yield, if that inversion does grow to 10 or 20 basis points, people will have to reconsider whether they should be investing in the long end or back at the short end, where they can get a higher rate. With the Fed putting rates up at the short end, that's going to be attractive to people with a short-term investment horizon.

If they cut by 50 basis points, we may also see some movement down in the rest of the yield curve, ... If they cut by 25 basis points, I don't think it shows up in the rest of the curve.

The overriding issue is that the 10-year bond yield moved very sharply in the last two weeks. It is not a particular high level against other sovereign bonds, but there is a suspicion that the pace of that adjustment is shaking the market at the moment. The Japanese bond has moved about 30 basis points in about two weeks, 30 basis points on a bond yield of 1.5% is a big move.

The short-end was pricing in too many rate hikes from the ECB. Yields are high enough, and I see more potential for recovery in the short end than the long end.

The short end was pricing in too many rate hikes from the ECB. Yields are high enough, and I see more potential for recovery in the short end than the long end.

The yield curve has narrowed. Some money market funds are now yielding more than 4%. At that rate, they're competitive with both short- and long-term bond funds.

Gary Schlossberg

Today's data are consistent with a still-strong trend in growth, a healthy labor market, and potential inflationary pressures, ... enough to keep the Fed on its steady diet of 25 basis-point rate hikes.

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