The Federal Reserve is not expected to take any policy actions after its two-day meeting this week, but it is likely to signal that it is thinking about them. Some economists expect the Fed to mention a coming tapering of its bond-buying program and give preliminary guidance on the discussion but not fully commit to tapering yet. The real details of the tapering of its $120 billion monthly purchases are expected to come later this year. The Fed will also release new economic forecasts, which it does quarterly. There’s a chance it could pencil in an initial rate hike in 2023. In its previous forecast, there was no consensus for a rate hike among Fed officials though 2023.
Japan exports jump most in 41 years, machine orders rise
Japan's exports rose at the fastest pace since 1980 in May and a key gauge of capital spending grew, helping the world's third largest economy offset sluggish domestic demand as COVID-19 vaccinations boost business activity in key markets. The jump in
exports largely reflected a rebound in shipments from last year's pandemic-driven plunge, but was a welcome sign as the economy struggles to rebound from the first quarter's doldrums amid a prolonged coronavirus state of emergency. Ministry of Finance data on Wednesday showed exports grew 49.6% year-on-year in May, versus a 51.3% increase expected by economists in a Reuters poll, led by U.S.-bound car shipments. The jump followed a 38% rise in April and marked the sharpest monthly increase since April 1980, when shipments surged 51.4%. May's rise largely reflected the recoil effect of a 28.3% plunge in May of 2020.
U.S. corporate bond spreads narrow to multi-year lows
Yield spreads on benchmark corporate high-yield and investment-grade bond indexes narrowed to multi-year lows on Monday as investors snapped up debt throughout the credit spectrum amid a willingness to accept more risk for heftier returns. The yield spread on the ICE BofA U.S. High Yield Index, a commonly used benchmark for the junk bond market, fell to 317 basis points as of late Monday, the lowest since October 2018. For the ICE BofA U.S Investment Grade Index, the yield spread slid to 89 basis points, the lowest since February 2007. The narrowing of spreads, which refers to the interest rate premium investors demand to hold corporate debt over safer U.S. Treasury bonds, driving money into securities with lower credit ratings than Treasuries.
Dollar holds near one-month high; focus on Fed's inflation take
The 10-year government bond yield (interpolated) on the previous trading day was 1.83, +0.00 bps. The benchmark government bond yield (LB31DA, 10.5 years) was 1.83, +1.50 bps. LB31DA could be between 1.80-1.85. Meantime, the latest closed US 10-year bond yields was 1.51%, +0.00bps. USDTHB on the previous trading day closed around 31.13 Moving in a range from 31.14-31.19 this morning. USDTHB could be closed between 31.14-31.21 today. Meantime, The dollar held near a one-month high against a
basket of currencies on Wednesday as investors tried to ascertain if the Federal Reserve might alter the language on its stimulus
following a recent jump in U.S. inflation.
Sources : Bloomberg, CNBC, Investing, CEIC
