Three key trades to watch before another jumbo Fed interest rate hike

Investors bracing for another jumbo Federal Reserve rate hike are focused on a few key trades: betting on deeper inversion in the US yield curve, further losses in stocks and a stronger dollar

Photo: Bloomberg
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Photo: Bloomberg

Liz McCormick and Isabelle Lee | Bloomberg
Investors bracing for another jumbo Federal Reserve interest-rate hike are focused on a few key trades: betting on deeper inversion in the US yield curve, further losses in stocks and a stronger dollar.
 
Short-term Treasury rates have exceeded yields on longer maturities for months, in a time-tested harbinger of an economic downturn ahead. The MLIV Pulse survey, which drew 737 responses, showed that the bulk of contributors expect further inversion. Some see it reaching levels last seen in the early 1980s, when Paul Volcker ratcheted up borrowing costs to break the back of hyperinflation.

That outlook underscores the bearish sentiment

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First Published: Sep 19 2022 | 6:57 AM IST

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