Markets reacted to Fed minutes

They all agreed that the central bank should move quickly on interest rate hikes to control inflation but downplayed the odds of a recession. They pointed to a tight labor market, household spending, and a business fixed investment that has remained strong. Interest rate hikes will continue as expected, with two 50 bps rises in the next two meetings, probably followed by some 25 bps hikes, to assess the effect of this restrictive monetary policy at the end of the year. Even some members of the Fed, such as Bostic, the President of the Federal Reserve Bank of Atlanta, have suggested pausing the pace of increases in September. Everything indicates what the market anticipated - the 10-year bond yield at 3.20% - had far exceeded what the Federal Reserve is now announcing. Treasury bond yields continue to decline, with the 10-year yield around 2.75%. This shows that the Federal Reserve, despite acknowledging that inflation is its concern, is also considering the slowdown in the economy caused by the conflict in Ukraine and the measures taken by the Chinese government to combat the pandemic. Therefore, as we have commented on previous occasions, the economic figures related to the economy’s growth and those of inflation have become more important.