Expectations for interest rates were front and centre for markets this week, as Jay Powell, chair of the US Federal Reserve (Fed), said on Wednesday that it was appropriate to move quickly in order to control inflationary pressures, with a 0.5% rate increase in May a real possibility. Earlier in the week, the chair of the St Louis regional Fed said a rate increase of 0.75% could not be ruled out sometime this year. US Treasury yields, which move inversely to price, rose with the 10-year now yielding 2.93%. The market is pricing in US interest rates of around 2.8% by the end of the year, today they are in the range of 0.25% to 0.50%. Similarly, officials from the European Central Bank pointed to the possibility of a rate increase as early as July. It was only four months ago that Christine Lagarde, president of the ECB, said a rate rise in the Eurozone was very unlikely.
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