On December 11, Sanders, head of fixed income at Madison Investments, said in a report that the continued steepening of the U.S. Treasury yield curve highlights a key point: the limited impact of monetary policy on the market.
Sanders stated, "Policy changes can have a significant impact on the front end (of the yield curve), but longer-term structural problems, including above-target inflation and a large fiscal deficit, will continue to put pressure on the back end." He said that Fed Chairman Powell's acknowledgment of a softening labor market quickly triggered bond buying, reversing the initial sell-off in Treasuries and steepening the yield curve. Madison expects the Fed to slow its pace of further easing from now on, anticipating that the Fed will keep interest rates unchanged until the second quarter of 2026. (Jinshi)
