NEW YORK, Nov 16 (Reuters) – The U.S. bond market is holding up well amid recent volatility and rising yields are being driven more by uncertainty over the economic outlook than by changing views on monetary policy, the New York Fed responsible for implementation said. Reserve official monetary policy said on Thursday.
“The Treasury market is functioning smoothly,” Robert Perley, who manages the U.S. central bank’s vast holdings of cash and bonds, said in prepared remarks for a conference speech at a regional Fed bank.
“We don’t see any evidence of market dysfunction,” Perli said. “This generally means that we can take Treasury prices and their signals as an accurate reflection of the views of market participants,” he said.
With markets holding on amid the churn, Perley said that based on his analysis, the rise in yields, which has not been steady, does not depend on what market participants think about policy and the economic outlook. Are. Instead, he said, they are demanding more compensation for holding securities in a time of high uncertainty.
“Sources of uncertainty abound these days, ranging from questions about the longevity of the recent boom in growth to the possibility of further inflation or deflation,” Perelli said, adding, “Buyers are looking for comparisons to the past.” There is also discussion about low demand.” are less price-sensitive – for example, banks, insurance companies, central banks and pension funds.”
Perly discussed bond yields at a time when the Fed has either ended, or is close to ending, its rate hike campaign amid ample signs of easing inflation. But economic growth remains strong and the job market remains strong, raising questions about whether further rate hikes may be needed. However, markets are now moving towards a rate cut.
Michael S. Reporting by Derby; Editing by Paul Simao
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