Bondurri: Fed Going Higher for Longer

The transcript discusses the 'higher for longer' trajectory of interest rates, emphasizing the need for 10-year government bond rates to reach 4% to reflect this. It highlights the market's expectation of an early Fed pivot, which is unlikely. The impact of Fed policy on equity markets is explored, noting that a lack of rate cuts could halt market rallies. The potential for a hawkish Fed stance is considered, with implications for equity valuations. The market's reaction to the RBNZ's unexpected decision is analyzed, focusing on currency and bond markets. Finally, factors contributing to potential dollar depreciation are discussed, including strong dollar appreciation, Fed policy, and geopolitical stabilization.

What is the expected rate for the 10-year government bond to reflect the 'higher for longer' trajectory?

• 4.5%

• 3.75%

• 4%

• 3.5%

What is the market's current misconception about the Fed's actions next year?

• The Fed will decrease rates slightly.

• The Fed will increase rates significantly.

• The Fed will cut rates earlier than expected.

• The Fed will maintain current rates.

How might the lack of rate cuts next year affect the bear market rally in equities?

• It will boost the rally.

• It will have no effect.

• It will cause a minor dip.

• It will halt the rally.

What could a hawkish stance from the Fed include?

• No change in rates

• A 50 basis point increase

• A 75 basis point increase

• A 25 basis point decrease

What is the potential impact of a hawkish Fed narrative on equity valuations?

• It will have no impact.

• It will decrease valuations.

• It will stabilize valuations.

• It will increase valuations.

Why might the dollar start to depreciate in the coming quarters?

• Due to a strong dollar appreciation last year

• Due to geopolitical instability

• Because of a decrease in global trade

• Because of a widening yield gap

What factor could contribute to a narrowing yield gap against the USD?

• Increased geopolitical tensions

• Other central banks catching up

• A decrease in global trade

• A strong dollar appreciation