Tuesday , October 17 2017
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Snap AV: A soothsayer bids you beware…

Summary:
Yes, Ides of March references have been made many, many times. But when the Fed’s expected to raise rates on the same day the suspension of the US debt ceiling is lifted, and that day is March 15, what else is a blogger supposed to do?In any event, the soothsayer in question today is one who’s permanently pessimistic, so take with the usual grain of salt. Albert Edwards of Societe Generale warns about the market implications from an accelerated pace of Federal Reserve hikes:Accelerated Fed rate hikes will cause tremors in the Treasury bond markets, forcing rates up, most especially in the 2 year – just like 1994. But as yet another central bank-inspired global recession unfolds, I believe US 10y bond yields will ultimately converge with Japanese and European yields well below zero – in other words, buy 10y bonds on weakness!He says the comparison to 1994 fits because it was widely expected that the Fed would raise rates back then as well. From SocGen:The main worry is this: Market scepticism over the Fed’s projected pace of tightening kept two-year yields low through the first two hikes, so if traders decide the Fed is serious next week, there’ll be a selloff and yields will rise sharply:Of course, there wasn’t quantitative easing in Europe and Japan in 1994.

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Alexandra Scaggs
Alexandra Scaggs is a markets reporter for the Wall Street Journal in New York. She writes about the U.S. stock market and investment trends. She also covers the business of markets research, writing on the calls, personalities and moves of high-profile analysts and strategists. Ms. Scaggs graduated from Washington & Lee University with a degree in business journalism.

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