US: Interest rate adjustment stalled alongside the greenback - BBH

Research Team at BBH, suggests that in March several regional Fed presidents talked up the prospects of a rate hike as early as April while the Yellen effectively closed the door on this line at her March speech in NY.

Key Quotes

“Dudley's comments last week, after the FOMC minutes, likely reflected the views of the Fed's leadership, and should be reiterated by the Chair.

The interest rate adjustment has stalled alongside the greenback. The August Fed funds futures contract, which offers the clearest view of a June or July hike, has stalled at an implied yield of 55 bp or about a 72% chance. As recently as May 16, the implied odds were closer to 20%. The US 2-year premium over Germany widened from 125 bp after the US employment figures on May 6 to 143 bp yesterday.”