Kaohoon Morning Brief – 17 February 2022

1) Fed sets its plan for rate hikes and cutting bond buying in motion

The U.S. Federal Reserve has set its plan to begin raising interest rates and cutting trillions of dollars in bonds on the central bank’s balance sheet, according to the minutes released Wednesday from the recent meeting of the officials.

The statement from the meeting noted that interest rate hikes likely are on the way soon and the unwind of the bond portfolio could be aggressive.


2) JPMorgan expects 7 rate hikes this year and 3 in 2023

JPMorgan revised its Fed expectations in 2022 by removing two previous-expected pauses to now look for seven hikes this year, up from five in the prior outlook, while thinking a 50bp rate hike is unlikely to occur. JPMorgan expected three more hikes next year.


3) Credit Suisse expects 10-Y bond yield to hit 2.7% in 2022

Credit Suisse expected the 10-year U.S. Treasury yield to rise to 2.7% this year, strengthened by persistently high inflation that rose to 40-year high, which sets the plan for a rate hike in motion by the central bank.

The forecast of Credit Suisse is one of the most aggressive forecasts of any major bank.


4) Oil continued to slide on profit taking and persisting tension at Ukrainian border

Oil prices slipped on Wednesday and continued to slide on Thursday in the early session of Asian markets as part of the profit taking from traders after the price recently hit a 7-year high. Meanwhile, NATO Secretary-General Jens Stoltenberg said that the alliance had not seen any de-escalation and that Russia was continuing its military build-up.