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Bonds sway after hawkish Fed remarks as short-end yields move

Fed Funds Futures for the middle of next year reportedly returned to yesterday’s levels as the short end of the curve came under pressure.

Reported · Written up by our desk · Mortgages

Mortgage News Daily said bonds were initially moderately weaker, with the move linked to rising oil prices and hawkish comments from Fed Governor Chris Waller.

The outlet cited Waller’s view that additional rate hikes may be needed because the economy remains strong, inflation has stayed persistently high, and inflation expectations risk becoming unanchored after more than 5.5 years above the Fed’s target.

The publication said the selloff hit the short end of the yield curve around 4:30 a.m. ET and pulled Fed Funds Futures for the middle of next year back to yesterday’s levels.

It also noted that while 10-year yields later moved back to unchanged in the last few minutes, the reasons for that shift were unclear, with some explanations pointing to Europe and the ongoing bond market volatility.

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