The Fed's Still Happening

Inflation pressure will keep Yellen on track for December.

A Trump fiscal firehose should put Federal Reserve Chair Janet Yellen under pressure to keep inflation under control. A December rate increase still looks on track.

Look at the 2-year Treasury -- that it's little changed after the election tumult suggests the chances of a Fed hike next month are just as high as they were going into what was expected to be a comfortable Clinton victory. 

Back to Flat

The two-year's recovery from Trump-induced volatility suggests investors see the Fed on track for a December rate increase

Source: Bloomberg

Intraday times are displayed in ET.

The December Fed Funds contract is just 1 basis point stronger on the day so far, having taken back thoughts of a Fed delay that had pushed it 4.5 basis points stronger earlier. That the Fed might move in just a few weeks is also reflected in the stability of the euro versus the dollar, as well as the dollar/yen.

Nothing to See Here

Dollar is pretty much back to where it was before the U.S. election surprise

Source: Bloomberg

Intraday times are displayed in ET.

The brutal reality is bonds are no haven here, as I argued earlier today. The plunge in the price on the 30-year futures contract says it all -- this is a massive selloff and a big loss of enthusiasm for the long end.

Building! Sad.

U.S. long bond futures nosedive on prospect of massive government infrastructure spending plus tax cuts

Source: Bloomberg

The potential for a huge round of infrastructure spending plus tax cuts amounts to a grim day for the long end in fixed income. 

An equity bounce would be the final piece of the puzzle.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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    Marcus Ashworth in London at

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