Might the Fed hold off till March?

Genevieve Signoret

Fixed income

In Macro Views today we wrote that, if markets don’t settle down soon, we’ll change our call for a first Fed hike to March 2016 from October 2015. Our first graph in this blog entry shows you why: bond markets are signaling a relapse in inflation expectations.

We also wrote that we’re much more certain now than we were two weeks ago that the Fed won’t hike next Thursday 17 September. Our last two graphs back us up. Do you see how U.S. corporate bond spreads are spiking? Why should the Fed restrict financial conditions when bond markets are doing it on their own?

Bond markets signal a relapse in inflation expectations. Might the Fed wait all the way till March?

 See how U.S. corporate bond spreads are spiking?  

Why should the Fed restrict financial conditions when bond markets are doing it on their own?