US yields fall as markets not convinced of another rate-hike move

economictimes.indiatimes.com:

yields slid on Wednesday in choppy trading after the Federal Reserve raised interest rates by a widely expected 25 basis points (bps) and left the door open for another increase, but the market is not buying it. The rate hike, the Fed's 11th in its last 12 meetings, set the benchmark overnight interest rate in the 5.25% to 5.50% range. The accompanying policy statement left the door open to another increase, citing still-elevated inflation.

Fed Chair Jerome Powell, in remarks after the rate decision, said the U.S. central bank has not ruled out raising rates in consecutive meetings. «It is certainly possible we would raise the funds rate at the September meeting if the data warranted, and I would also says it's possible that we would choose to hold steady at that meeting» if that's what the data called for, Powell said.

Tom Simons, U.S. economist at Jefferies in New York, said Powell was «extremely vague» on his expectations for the future. «He spent the remainder of the press conference playing the two-handed economist, picking apart the assumptions implied in the press questions and deftly avoiding being painted into a corner with on-the-fly scenario analysis,» Simons said.

«We continue to expect that this will prove to be the final rate hike of the cycle, but we cannot rule out a September hike without seeing the data.» In his remarks, Powell was hawkish, but some market participants said he wasn't overly so. Powell said the Fed could raise rates in consecutive meetings if warranted. The benchmark fed funds futures factored in a 22% chance of a hike in September, compared with 21% late on Tuesday, and just 13.7% a week ago, according to the CME's FedWatch.