Fed Faces Tough Task of Delivering on Tough Talk

The transcript discusses the Federal Open Market Committee's (FOMC) communication strategy regarding potential rate hikes and the market's nervousness about it. It highlights the influence of Japanese and European bond markets on global rates and the role of a scarcity bid in the US bond market. The credibility of the FOMC is questioned, especially concerning a potential rate hike on September 21. The transcript also explores the high correlation between Japanese Government Bonds (JGB) and the global bond market, driven by quantitative easing programs. Finally, it addresses market sensitivity to central bank actions and the potential for curve steepening.

What implications does the term premium adjustment have on future interest rates?

In what ways might the Federal Reserve regain credibility in its rate hike narrative?