Loading ...[HUH? LEBANON?? LOL ]
This week had somewhat of a capitulation look to it. After ending last week at 2.10%, Italian 10-year yields had sunk an incredible 55 bps at Thursday’s 1.55% low. Greek yields were down 42 bps for the week at Thursday’s 2.01% low. Elsewhere, Hungary’s 10-year yields were down 36 bps – India 31 bps, Turkey 70 bps,
Lebanon 61 bps
Mexico 27 bps and Brazil 24 bps – at Thursday’s lows. Turkey’s dollar bond yields were down 39 bps at Thursday’s 6.88% low.
A Friday afternoon Bloomberg headline: “Fed Debate Shifts From Large Cut to Whether to Cut at All.” While it did dip slightly in early-Friday trading, by the end of the session markets were back pricing a 100% probability of a rate cut at the Fed’s July 31st meeting. Fed funds futures imply a 1.81% Fed funds rate at the end of the year, up from Wednesday’s implied 1.63%.
Curiously, the market is still highly confident of a rate cut this month, this despite record stock prices, a trade “truce,” and a sharp snapback in job creation. Markets are clamoring for a rate cut and few believe the Powell Fed will risk a repeat episode of disappointing the markets.