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March 28, 2006
Bond Market Suggests Further Tightening
The second item that could stoke the bulls is a surprise from the Fed. There are two problems here: predicting the Fed language and predicting the market’s reaction. I think the market would react positive to “dovish” words indicating less inflation or moderating growth, both of which would reduce the propensity to keep raising rates. However, as I pointed out yesterday, there is nothing in the 5-year Note Yield ($FVX) chart to suggest a more accommodative stance.
Posted by Arthur B. Hill at March 28, 2006 05:07 AM