The Federal Reserve left interest rates unchanged

The Federal Reserve left interest rates unchanged and signaled it would stay on hold through 2020, keeping it on the sidelines in an election year while also opening the possibility it might buy short-term coupon-bearing securities to ease money-market strain. The Treasury 10-year yields fell below 1.8%, the dollar declined and U.S. stocks edged higher. Powell spoke after the Federal Open Market Committee held the target range of the federal funds rate steady at 1.5% to 1.75% and its median forecast showed no rate change through next year. (Bloomberg)

Bond and currency traders took a dovish message from the Fed’s policy decision, with markets moving up bets on the central bank’s next rate cut into 2020 from early the following year. Treasury rallied, pushing the 10-year yield down 5bps to 1.79%. The Bloomberg dollar index was down 0.35%, erasing its gains for 2019. (Bloomberg)

China’s yuan traders are undaunted by Sunday’s looming start of fresh U.S. tariffs even as investors elsewhere are piling into protection. As President Donald Trump’s Dec. 15 deadline for more duties on Chinese imports draws closer, one-week risk reversals have been at their lowest since July. And while volatility gauges for the currency have jumped in the past week, they remain well below levels reached in August, when the yuan weakened through 7 per dollar for the first time since 2008 amid trade worries. (Bloomberg)


Source: Danareksa Sekuritas Debt Research
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