FOMC

Bostic stuck to his prediction that three quarter-point increases starting in March is the most likely scenario, though stubbornly high consumer prices may justify a more robust rate rise.

The two biggest U.S. banks raised their forecasts of how quickly the Federal Reserve will raise interest rates this year, with Bank of America Corp. predicting a move at every meeting to tackle the highest inflation in four decades.

The statement offered no surprises, but Fed Chair jerome Powell's refusal to denounce more hawkish scenarios hurt market sentiment.

Triple-A benchmarks were cut two to six basis points across the curve with the largest moves concentrated again on bonds inside 10 years, underperforming Treasuries once again.

Munis are expected to underperform for another few weeks as markets remain volatile and investors reevaluate allocations.

Why are markets so sanguine about the interest rate outlook? The answer lies in the Fed’s balance sheet, and in particular the level of excess reserves placed there by commercial banks.

The combination of steady supply, heavy secondary selling and inconsistent demand have moved yields to their highest levels since May 2020.

The 2-, 5- and 10-year UST is higher than before the pandemic began as investors factor in a rate hike as soon as March.

Senate Banking Chair Sherrod Brown plans an early February hearing for President Joe Biden’s three most recent Federal Reserve picks and said he expects bipartisan confirmations of all five nominees to the central bank’s board.

Aoifinn Devitt, chief investment officer at Moneta Group, discusses the Federal Reserve’s plans to raise rates this year, whether this was truly a pivot in Fed thinking, how the market reacted to this change and will how they will respond when rates go up, how new members on the Federal Reserve Board could impact Fed plans and what this all means for investors. Gary Siegel hosts. (28 minutes.)