Fed decision expected to drive bond market, overwhelming trade and North Korea

In a week marked by drama surrounding global trade and geopolitics, bond investors are focusing on the basics.

They say the two-day Federal Reserve policy meeting that concludes Wednesday will be the focus for market participants, overshadowing President Donald Trumps moves escalating tensions with trade partners and allies in the Group of Seven nations and his Tuesday summit meeting with North Korea leader Kim Jong Un.

Read: Whos going to be this weeks biggest market mover?

The more tangible pace of Fed hikes and the ripple effect U.S. rates are having across the risk spectrum will overwhelm todays trade and Korea concerns, said Arnim Holzer, a portfolio manager for EAB Investment Group.

That reflects the importance of a Fed meeting thats fully expected to deliver a rate increase, which would be its second of the year, with investors eyeing the central banks monetary policy projections, or the dot plot, and Fed Chairman Jerome Powells press conference. A hawkish tone emanating from the meeting, could prompt investors to price in a total of four rate increases in 2018.

Reflecting concerns of a more aggressive hiking path, the 10-year Treasury note
TMUBMUSD10Y, +0.31%
is up more than 50 basis points since the beginning of January to 2.957%

Leave a Reply

Your email address will not be published. Required fields are marked *