Powered by MOMENTUM MEDIA
subscribe to our newsletter
Fed likely to raise funds rate in September

Fed likely to raise funds rate in September

The US Federal Reserve is likely to raise the Federal funds rate by 0.25 per cent at its September meeting, according to BondAdviser.

The research firm explained that given recent movements in the US 10-year bond rate, which climbed from 1.52 per cent to 1.73 per cent in the week ending 15 September, it is “not unreasonable” to think a 0.25 per cent hike has already been priced in to the market.

“If this turns out to be the case, then Australian bond investors should not be overly fearful of future US interest rate increases as most core Australian fixed-income funds are benchmarked against the Bloomberg AusBond Composite +0 Years Index,” the firm said.

Advertisement
Advertisement

The Bloomberg index’s yield to maturity of 2.1 per cent and average duration profile of 5 years mean interest rates would need to rise a full 1 per cent within a period of 12 months for the index to decline “by approximately 3 per cent”, BondAdviser said.

“Overall, we anticipate that the Federal Reserve will begin tightening monetary policy again soon, although we generally expect rates to rise progressively.

“This gradual process should ultimately allow investor expectations to shift and as a result we expect bond market volatility to remain limited relative to equity markets,” the research firm said.

Fed likely to raise funds rate in September
mortgagebusiness

 

Latest News

Ahead of Parliament returning next week, Prime Minister Scott Morrison has conceded that Australia is facing “challenges and headwinds” ...

Slater and Gordon has filed a class action against AMP claiming compensation for more than 2 million people it alleges have been charged ...

An aggressive monetary policy strategy employed in response to rate cuts in foreign markets would be a “dangerous path to go down”, Rese...

FROM THE WEB

podcast

LATEST PODCAST: Broker share and Westpac U-turn

Do you think the banking royal commission recommendations could negatively impact competition in the mortgage market?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.