Market Thinking: Plus Four

Yields outside the maturity curve also rose in what the bond market called a “bear flattening,” but by less than 2 years. This is the result – The annual government borrowing rate is

year high but also deepest 2- The yield curve more than a year old, for many observers, heralds a recession ahead. and not just the Fed going into overdrive. Even if the market only sees a 1 in 5 chance 27bp With the US rate hike this week, some may be uneasy to see the Riksbank surprise a full percentage point hike on Tuesday – Even unsuccessfully aggressive hikes lifted the crown. The Swiss National Bank and the Bank of England – whose meeting was postponed from last week due to the death of Queen Elizabeth II – are also expected to Offers Excess Rates for this week’s excursion. All will hear the advice from the BIS Group on Monday. “It is important to act promptly and forcefully,” said Claudio Borio, head of the Bank for International Settlements’ Monetary and Economics Department. Borio) said. “Pre-missions (of rate hikes) tend to reduce the likelihood of a hard landing.” The Bank of Japan may Stick to its easing policy again this week. But with Japan’s core consumer price inflation hitting its highest level in nearly eight years last month, there will be more debate on that stance in Tokyo ahead – especially as a weaker yen fuels import inflation. as German producer price inflation unexpectedly soared to 10.8% last In June, a debate over the extent to which dollar-denominated fuel and food imports have been benignly exaggerated by a surge in the U.S. currency will add to the headaches facing the ECB.