Interest Rate Dovish Outlook, FOMC, Bank Stress Tests

All eyes on FOMC decision on Wednesday
US Federal Reserve bank stress test will report key economic forecasts
Treasury Yields hover around recent lows
Interest Rate Brief

Interest Rate Brief

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What’s Happening in Interest Rates:

This Wednesday all eyes are on the FOMC two-day meeting with FOMC statement release and press conference. Markets anticipate a dovish stance on both.

This Friday we look forward to annual stress tests on large US based banks. The US Federal Reserve will release “baseline” and “adverse” economic forecasts.

There is a chase for yield as bond yields hover near lows, reflecting concerns about growth and expectations of lower inflation. In week ending June 12, investors poured $1.7 billion into mutual funds and exchange-traded funds that buy junk-rated corporate bonds. This is first net inflow into the asset class in eight weeks, according to data from Lipper.
 

Why FOMC and Stress Tests Matters:

It’s all about the FOMC this week. The market has priced in a dovish result and we will see what Chairman Powell says in post statement press conference. Pay attention to hawkish and dovish interpretation by the market.

The other key piece of data is the bank stress tests. The stress test results give baseline views on key economic indicators like inflation and growth. Pay attention to any forecasts that stray from current economist forecasts.
 

Here’s the link to the February 2019 US Federal Reserve bank stress test -  https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20190213a1.pdf

 

Interest Rate Futures Technical Levels:


Technical Analysis & Charts & Calendar by TradingView

 

 

Interest Rate Futures Chart:

 

Economic Calendar:

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