The Federal Reserve’s September meeting delivered an interest rate hike and unmistakably hawkish message last week, making it clear that the central bank is squarely focused on bringing down inflation.
Government bond yields worldwide continued their recent march upwards, now led by the short term, as the Fed, ECB, Bank of Japan and the Bank of England are all suggesting that their tolerance for above-target inflation is wearing thin. Stocks fell, and the US dollar rose against nearly every major currency worldwide. Both traders and economists (ourselves included) are busy revising their policy forecasts higher, and the lack of a resolution to the Iran conflict in the background only adds to the uncertainty.