LIVE MARKETS-US Treasury yields in a Powell exit scenario
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US TREASURY YIELDS IN A POWELL EXIT SCENARIO
Risks to Federal Reserve independence have been in the spotlight after U.S. President Donald Trump stepped up his attacks on Chair Jerome Powell for resisting calls to cut rates.
Analysts say Powell’s dismissal could drive short-dated yields lower on expectations of a more dovish Fed, while long-dated yields might rise amid heightened inflation concerns.
Deutsche Bank analysts crunched the numbers to gauge the potential market fallout.
"These results suggest the clearest trading expression in rates of Fed independence/fiscal dominance risks is in front-end real/long-end nominal steepeners,” Deutsche Bank analysts say.
The so-called belly of the curve — the 5-year maturity — is expected to remain stable, with no significant change in yields.
(Stefano Rebaudo)
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