Fed Vice-Chair Richard Clarida Cautions on Global Growth, Bond Yields Sink

Mike Mish Shedlock

Clarida says Fed is getting closer to neutral and that there is “some evidence” that the world economy is slowing.

U.S. Treasury yields and the dollar slides as Fed’s Clarida Cautions on Global Growth.

The Bloomberg Dollar Spot Index sank 0.5 percent and two-year Treasury yields dropped to the lowest since October after Clarida told CNBC that the Fed is getting closer to neutral and that there is “some evidence” that the world economy is slowing. His comments follow those of Fed Chairman Jerome Powell, who cited the prospect of cooling global demand in a speech Wednesday.

A tame inflation outlook may also support the case for the Fed to scale back its rate-hike trajectory, as Clarida said he doesn’t anticipate a big pickup in price pressures in 2019.

“That clears the way for an expected lower path of real rates,” BMO rates strategist Jon Hill wrote in an email Friday.

Bond Market Reaction

Only 3.6 basis points separate the 5- and 3-year durations.

Only 4.4 basis points separate the 3- and 2-year durations.

That's where yield curve inversion will likely begin.

Mike "Mish" Shedlock

Comments (13)
No. 1-8
Casual_Observer
Casual_Observer

Jaime Dimon says 2019 will be the biggest year in history for global growth.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

LOL - "Jaime Dimon says 2019 will be the biggest year in history for global growth."

Grumblenose
Grumblenose

Please say "maturity" instead of "duration" or it's confusing

thimk
thimk

does "neutral" mean we are neither going forward or backward ? raise those rates- time to cleanse the balance sheets.

Six000mileyear
Six000mileyear

10Yr US Treasury rates have been in a consolidation pattern for the past month. I'm looking for a channel break to the upside ( from the decline over the last 1.5 weeks) to confirm a near term low is in, and a break above 3.25% to confirm the longer term yield rally has resumed.

killben
killben

When the markets get tough, the Fed gets going. IMO, this is beginning of the end of rate hikes. Soon you will have Bullard and co chiming in.

But then what can we do when we have scoundrels doing god's work

aqualech
aqualech

The world has gone insane. Over less than a couple of decades the PTB have decided that parabolic debt growth in support of asset bubbles is what constitutes a healthy global economy. The faltering of either of those two things is now deemed unacceptable.

compsult
compsult

Doug Noland's analysis (http://creditbubblebulletin.blogspot.com/) seems on the mark here. The Fed is getting nervous for good reason. Leveraged loan funds at a 2 year low, CDS rates for Goldman and the other PigMan banks are rising, weaker Eurozone countries 10 year yields are rising and there are $3T in BBB corp bonds. I think that is the sound of the ice cracking on the global financial pond. No worries though, keep skating


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