Current U.S. 2-year term and 10-year Treasury yieldAnother short-term inversion, the 2-year yield once climbed to 2.337%, higher than the 10-year 2.331%. Cathie Wood, who runs Ark investment management firm, thinks the Fed’s decision to raise interest rates as the yield curve inverts would be wrong, accusing the Fed of appearing It’s “playing with fire”.
Wood said the U.S. 2-year and 10-year bond yieldUpside down, indicating that the Fed raised interest rates because of higher-than-expected inflation, may also cause weak economic growth, the Fed’s approach is a mistake. Inflation is a very aggressive tax that is killing purchasing power and consumer confidence, she said.
The inversion of the yield curve was seen as a key sign, reflecting investor fears that the Fed will tighten too much, limiting further economic growth and inhibiting bank lending.
Wood pointed out that the University of Michigan’s U.S. consumer confidence index has fallen below levels seen at the height of the Covid-19 pandemic, and is approaching levels seen during the 2008-2009 global financial crisis, when the Fed was struggling to contain inflation and interest rates briefly hit two levels. digits.
Wood believes that when the U.S. economy is in recession, and considering that other major economies are also facing difficulties, the Fed’s rate hike strategy seems to be “playing with fire.”
Under the high inflation, the Fed has started a cycle of raising interest rates. The market expects that the remaining 6 meetings this year will raise interest rates, and the Fed said it would not rule out extending the increase to 2 yards (0.5 percentage points). Bank of America had expected the Fed to raise rates by 50 basis points in June and July, and 25 basis points at all other meetings before the end of the year.
