A quarter point raise is already priced in. A half point raise could have the opposite effect on the long end of curve because it would likely be taken as a deflationary surprise for future growth and a stronger than expected stance against inflation, which could cause de-risking flows from stocks to bonds. The result is an asymmetric trade opportunity due to the expected outcome already being priced in and the "surprise" outcome potentially resulting in a favorable movement.
Watch for resistance around 2% yield and trendline break in lead up to March FOMC meeting.
Watch for resistance around 2% yield and trendline break in lead up to March FOMC meeting.
Note
The expected outcome is now a half point hike so this changes things: cmegroup.com/trading/interest-rates/countdown-to-fomc.htmlNote
Game on
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.