Kate Duguid

Futures traders boosted expectations in the past week of a bigger trim than the traditional 0.25 percentage point change

More than $66bn has poured into fixed-income funds since start of July

Federal Reserve officials thought that US inflation was cooling but still needed “greater confidence” before they agreed to cut interest rates from their 23-year high, according to minutes of their most recent meeting. “Participants suggested that a number of developments in the product and labour market supported their judgment that price pressures were diminishing,” said the minutes from the June meeting, published on Wednesday. Some rate-setters also noted that retailers were now offering p…

The US will be forced to fund a massive increase in its budget deficit with short-term debt, analysts have said, with consequences for money markets and the battle against inflation. The Congressional Budget Office, the independent fiscal watchdog, this week said aid packages for Ukraine and Israel would help push up the US deficit this fiscal year to $1.9tn — compared with its February prediction of $1.5tn. “We are spending money as a country like a drunken sailor on shore for the weekend,” s…

Investors increase bets on Fed’s interest rate cuts this year as price growth moderates

Ray Dalio, the billionaire founder of hedge fund giant Bridgewater Associates, has warned that the US government’s rising debt levels could hit Treasury bonds, arguing that investors should move some of their money to foreign markets. In an interview with the Financial Times, Dalio described his wide-ranging concerns about the US, including its debt load, the risk of what he calls a “civil war” and the potential for the country to become involved in another international conflict, which he warn…

Persistent inflation and hot US growth have left the Federal Reserve’s rate-cutting hopes “off track”, Bridgewater’s Bob Prince said on Tuesday, adding an influential voice to the growing chorus asking whether US rates will start to fall this year. “So far, this year is not transpiring the way that the Fed — or interest rate markets — have described. I think it is clear the Fed is off-track now. The question is how far off track,” Prince, the $112.5bn hedge fund’s co-chief investment officer, t…

When hedge fund billionaire Ken Griffin told an industry conference this week that the US bond market was due some discipline, he was voicing the concerns of many investors about the impact of the government’s huge spending and debt issuance plans. US government spending “is out of control”, he told the Futures Industry Association’s gathering in Florida. “And unfortunately, when the sovereign market starts to put the hammer down in terms of discipline, that can be pretty brutal.” But while th…

Investors have fallen into line with the Federal Reserve’s expectation that it will cut interest rates just three times this year, ending a months-long stand-off between markets and the central bank. Following a run of economic data signalling that US inflation is stubbornly high, traders were on Friday pricing in only three quarter-point rate cuts by the end of the year, according to data compiled by LSEG. Before Tuesday’s unexpected rise in US inflation, investors had bet on almost a full pe…

It’s 2021 again. We have rising Covid cases, poor prospects for British athletes at the Olympics, and a public fight about transitory inflation. Back then, the argument made by “team transitory” economists (and Jay Powell, for a while) was that price pressures were mostly attributable to lockdowns, jams in supply chains and Russia’s war in Ukraine. But inflation picked up pace and prices rose in an increasing number of sectors, even as economies reopened. The Fed abandoned “transitory” and star…