ATFX - Inflation rebound is nothing to fear? Bond giants are convinced that the Federal Reserve will not raise interest rates again

Some large U.S. bond investors said on Wednesday that they believe the Federal Reserve has reached the peak of raising interest rates, despite rising inflation caused by a surge in energy prices in August.

U.S. consumer prices rose by the most in 14 months in August as gasoline prices rose, even though the annual increase in underlying inflation was the smallest in nearly two years, according to a report released Wednesday by the Labor Department.

However, some bond fund managers believe that,It's only a matter of time before the 525 basis point rate hikes already implemented by the Fed will have an impact on consumer prices。

"We think,The last rate hike of this cycle may have already occurred"Because the economic data the Fed will see in the coming months will keep them on the sidelines," Greg Wilensky, head of U.S. fixed income at Janus Henderson Investors, said in a memo.

The Federal Reserve raised rates by 25 basis points in July. Bets on the Fed funds futures market showed that traders generally believed the Fed would leave rates unchanged at the end of the FOMC meeting on September 20, but late on Wednesday the market priced in a 40% chance of another 25 basis point increase in November.

According to David Kelly, chief global strategist at JPMorgan Asset Management,The Federal Reserve has reached the peak of the current monetary tightening cycleInflation is expected to fall below the Federal Reserve's 2 percent target by the end of 2024, he said in a report.

"Based on today's data, we still expect the Fed to skip any further rate hikes in September, and overall, we don't expect any further rate hikes in this cycle," he said.

Of course, since the Federal Reserve began raising interest rates in March last year to rein in the economy, inflation has proved more stubborn than many expected, leaving some big investors hesitant about whether the Fed has ended tightening.

Rick Rieder, global chief investment officer for fixed income at BlackRock, the US agency bond management giant, said on Wednesday that there was a "worrying" possibility of inflation exceeding pre-epidemic levels for a long time due to structural factors such as large government deficits and large debts. Despite some volatility, he expects the slowdown in price pressures to continue. "There have been some mild disappointments from time to time in the fight against inflation. But we think,The trend towards lower and more sustainable inflation is persistent", he said.