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Problems for the zombie companies as the Fed fights inflation. Fitch Ratings has warned that global bond markets face a rude shock as the US Federal Reserve jams on the brakes to avert overheating, with grave implications for inflated asset prices across the world. Brian Coulton, the agency's chief economist, said investors have underestimated the Fed's determination to drain excess liquidity and prevent the inflation genie escaping from the bottle. It can no longer wait as White House fiscal stimulus drives a surge in late-cycle growth. "When you listen to what Fed chairman Jay Powell is saying, you have to take him at his word," Mr Coulton told The Daily Telegraph. "We think there will be four more rate rises by the end of next year, and the markets have not got their arms around
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Problems for the zombie companies as the Fed fights inflation.Problems for the zombie companies as the Fed fights inflation. Fitch Ratings has warned that global bond markets face a rude shock as the US Federal Reserve jams on the brakes to avert overheating, with grave implications for inflated asset prices across the world. Brian Coulton, the agency's chief economist, said investors have underestimated the Fed's determination to drain excess liquidity and prevent the inflation genie escaping from the bottle. It can no longer wait as White House fiscal stimulus drives a surge in late-cycle growth. "When you listen to what Fed chairman Jay Powell is saying, you have to take him at his word," Mr Coulton told The Daily Telegraph. "We think there will be four more rate rises by the end of next year, and the markets have not got their arms around
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Fitch Ratings has warned that global bond markets face a rude shock as the US Federal Reserve jams on the brakes to avert overheating, with grave implications for inflated asset prices across the world.
Brian Coulton, the agency's chief economist, said investors have underestimated the Fed's determination to drain excess liquidity and prevent the inflation genie escaping from the bottle. It can no longer wait as White House fiscal stimulus drives a surge in late-cycle growth.
"When you listen to what Fed chairman Jay Powell is saying, you have to take him at his word," Mr Coulton told The Daily Telegraph.
"We think there will be four more rate rises by the end of next year, and the markets have not got their arms around this."
There is a shock coming'
"There is a shock coming," said Mr Coulton. Yields on 10-year US Treasuries surged to a seven-year high of 3.22 per cent after Mr Powell said the US economy was firing on all cylinders and issued fire-breathing comments on interest rates.
We may go past neutral," he said. "But we're a long way from neutral at this point."
Pepperstone Group said a move of this size is a "very rare occurrence" for the US Treasury market. Contagion spread instantly through the global debt Trump's
Trump's spending blitz on infrastructure has suddenly begun to flow through, at exactly the wrong moment in the economic cycle.
Trump's spending blitz on infrastructure has suddenly begun to flow through, at exactly the wrong moment in the economic cycle.
The Financial Review (source, The Financial Times)