BNY Mellon Weekly Fixed Income Market Commentary


As we try and catch up from our one week hiatus from the Weekly Commentary, we are reminded of one of our favorite movie monologues, courtesy of Robert De Niro in The Untouchables. To paraphrase the baseball bat dinner scene, there is a time for individual achievement, but most of the time is spent playing on the field as part of a team. Regardless of how good the player is, with references to Babe Ruth and Ty Cobbs (this is a 1930s gangster movie), they get nowhere unless the team wins. We bring this back into our world with the Fed having demonstrated its individual achievement of raising rates at the end of last year and viewing an economy that could support four more increases this year. The underperformance of the rest of the team has overshadowed this individual performance however, with global growth and commodity weakness driving the historic underperformance that we witnessed at the beginning of the year. We therefore sense that a serious team meeting took place, possibly during the G20 summit, to try to right the ship. We have since had the series of central bank meetings that have generally maintained the dovish tone established since the beginning of the year. The Fed even appeared to move in this direction, lowering its rate hike expectations from four to two, although maintaining that the economy was doing just fine. Those statements in and of themselves are somewhat contradictory, with post FOMC speakers adding to the confusion by generally sounding a more hawkish tone, creating the aura that an April or June rate increase remained in the cards.

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