US bonds fall before Fed meets
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Bond prices in the United States dropped ahead of today's monthly meeting of the Federal Reserve, as traders questioned prevailing wisdom that an interest rate rise would not be needed to curb an over-heating economy.
The benchmark Treasury bond fell 0.38 per cent, about $3.75 per $1,000 bond, while yields rose to 6.8 per cent during trading yesterday.
Terrence Pigott, head trader at Daiwa Securities, said: "Most people think [the meeting] is going to be a non-event. The market would sell off if they did tighten interest rates."
Meanwhile, the US dollar closed lower in London against the German mark yesterday, falling from Dm1.4900 to Dm1.4875 and losing gains made on Friday after traders scaled back expectations of a cut in interest rates at the Bundesbank's meeting on Thursday.
Despite fears of a possible rise in rates from the Federal Open Market Committee (FOMC), most leading economists discounted the possibility.
"We are looking for no policy changes and most people in the market expect the same," said Michael Englund, chief economist at MMS International, a research firm which surveys market economic views.
"Our view is that economic data continues to show a fairly healthy economy in the third quarter, but in the absence of any surprises on the inflation front, the Fed has been let off the hook."
Most economic data for July showed a slowing of economic activity from a very strong second quarter when US gross domestic product surged to 4.2 per cent from a first quarter reading of just 2.0 per cent.
"While Fed officials are all but certain to leave policy unchanged at the FOMC meeting the recipe for renewed debate about eventual Fed tightening is already in the making," warned John Lipsky, chief economist at Salomon Brothers.
One concern was recent jobless claim figures, which "have dropped appreciably," said Bill Sullivan, director of money market research at brokerage firm Dean Witter Reynolds.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments