Central banks made the major moves, albeit less spectacular than at earlier stages in the cycle - the Federal Reserve raised its Federal Funds Rate by 25 bps taking it to 5.25%; the European Central Bank raised its key interest rate, also by 25 bps taking it to 3.25%.
UOB Economics and Markets Research says: “markets continue to imply substantial rate cuts by end of the year, an expectation which Fed Chair Jerome Powell has characterised as “not appropriate.”
Indeed, the chart of the 10-year treasury yield shows the yield falling below its moving averages which in turn have turned down. Directional movement indicators appear to be turning negative, and quarterly momentum is rolling over after its inability to move above its equilibrium line. Support/ breakdown is at hand, at 3.40%. And there are signs that this level could give way.
