Fed Likely to Tighten Faster Beyond 2015 Than Markets Expect

Quotes from Barclays Capital:

-Our bullish USD and higher US rates views are built on a continuing economic recovery, tightening labor markets and significant rise in inflation versus Fed forecasts.

-We believe the Fed is likely to tighten faster beyond 2015 than markets expect and the gap between market pricing and Fed rate projections is likely to narrow. We expect sharper moves higher in the belly of the rate curve rather than the long end.

-Although the USD is anticipated to rally across the board, the higher belly interest rates support it, especially versus G10 currencies. We expect the tighter liquidity conditions to make USD-funded EM carry trades unattractive, however.

Published: 2014-06-27 09:45:00 UTC+00

Fed Likely to Tighten Faster Beyond 2015 Than Markets Expect