Find out which bond strategies offer the best protection and investment return during the Federal Reserve's
monetary tightening cycle.
Not exact matches
The last time a Liberal government entered an election in the middle of a
monetary policy
tightening cycle was in 2006; that year, the Conservatives defeated them.
Since the U.S. is the most advanced in its
cycle, the Fed is at the forefront of the
monetary tightening debate.
During this
cycle of
monetary tightening, the fed funds rate — the rate controlled by the Fed to influence borrowing costs — has been raised four times.
In some ways, this U.S. policy rate hike
cycle is similar to the one in the mid-2000s, where the U.S. dollar remained weak and EMs» growth
cycle was not derailed by U.S.
monetary tightening.
Implied volatilities gradually declined around the world in the second half of 2003, as it became clearer that the easing
cycle was drawing to a close, with some central banks beginning to
tighten monetary policy after a prolonged period of relatively low and stable interest rates.
«While the Fed is moving in one direction and getting ready to raise interest rates and embark on a
tightening cycle, the European Central Bank is going in the other direction and easing
monetary policy,» says Eric Viloria, a currency strategist at Wells Fargo in New York.
While the Fed is moving in one direction and getting ready to raise interest rates and embark on a
tightening cycle, the European Central Bank is going in the other direction and easing
monetary policy.
Against that background, one might justifiably ask whether it makes sense to have one economy (the United States) in a
tightening monetary policy
cycle, while the other (eurozone) presses on with its more accommodative easing program.
Readers may recall that we have talked about the theory espoused by our previous guest speaker Ben Hunt with respect to price inflation in a period of
monetary tightening in a series of recent posts entitled «Business
Cycles and Inflation» (see Part 1 and Part 2 for the details).
The inflationary impacts of our
monetary policy continue to radiate out, and will continue to, until the Fed starts its next
tightening cycle.
The recent move up began in earnest at the beginning of the last
tightening cycle, but has persisted into the loosening
cycle, as the FOMC has not let the
monetary base grow, but has permitted the banks to continue to gather deposits (banking, savings, CDs, money market funds).