Fiscal Policy Is Bigger Bond Risk Than Fed, Pimco’s Clarida Says
- Former Fed vice chair warns of potential ‘fiscal dysfunction’
- Highlights ‘disconnect’ between policymakers and market views
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Fiscal policy risk is more likely to drive up US bond yields than further tightening from the Federal Reserve, said the central bank’s former vice chair Richard Clarida.
The market repricing that took Treasury yields to 15-year highs last month has now largely run its course, with concerns over the US budget now more likely to take yields above recent levels, Clarida said. The government is seen risking a shutdown over spending as soon as next month.