NEW YORK--(BUSINESS WIRE)--Wall Street Webcasting presents exclusive video of Rich Gordon, the highly regarded Fixed Income Market Strategist of Wells Fargo Securities (NYSE:WFC). This week Gordon concentrates on the potential rate hike coming this June.
February’s Payroll Report was quite secure, with 295,000 jobs added to the market this past month in a wide range of areas. This supports a strong argument for a rate hike come this summer. However, starting in the beginning of 2015, the predicted chance of a rate hike was at 26.3%, which has since fallen to 22.2%.
An important question still remains: “how can the fed wind down on a zero interest rate policy without it causing price corrections in financial markets?” This is to be determined, but for now, this is what we know. Yields moved sharply higher across the curve after the release of the payroll report last Friday. Long-end bond yields have come full circle and are back to where they started at the beginning of the year. They haven’t really risen this year, despite the growth in the payrolls report. The 5s/30s spread is only 1 basis point steeper than where it was before the number was released, which suggests that the slight steepening of the curve between the intermediate and long-end we’ve seen since February is counter-trend, and the tights that were made around 100 basis points will be re-tested.
Spread markets inclusively performed well in the sell-off. It is suggested that a trade-off in rates may cause the spreads to widen. Mortgages also held well. Banks put money to work as yields rose. Stock markets sold off sharply on Friday across the board; however, the tone was better on Monday as the ECB began its bond-buying program.
To hear Gordon’s analysis of the solid economic performance and what this means for the possible rate hikes in the coming months, please tune into Wells Fargo Securities’ newest video.
Please visit the following link to view the video: