The U.S. Yield Curve Sends Warning On The Economy And On The Equity Market

The minutes of the FOMC April monetary policy meeting published on May 18 signaled that the Federal Reserve is ready to raise interest rates as soon as in June if economic data to be published over the coming weeks would confirm that economic growth and inflation are strengthening. It was a surprise for most of investors as a rate hike was no longer considered possible at least until September. Fed Funds futures, which assigned thin probability to a rate hike in June or July before the release of the minutes, now see a more than 50% chance of a 25bp rate hike by the end of July.

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