Fed's Tug of War: June's Pause Masks The Challenges Of A Tricky Balancing Act
Portfolio Pulse from Piero Cingari
The Federal Reserve faces a critical juncture in its interest rate hiking cycle, with the outcome of the FOMC meeting on June 14-15 holding significant implications for markets and the economy. Bond investors anticipate a pause in the upcoming June meeting, but foresee potential rate hikes resuming as early as July. The iShares 1-3 Year Treasury Bond ETF (NYSE:SHY) has fallen 1.2% in the past month, reflecting expectations of further tightening by the bond market.

June 12, 2023 | 9:24 pm
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The iShares 1-3 Year Treasury Bond ETF (NYSE:SHY) has fallen 1.2% in the past month, reflecting expectations of further tightening by the bond market as the Federal Reserve faces a critical juncture in its interest rate hiking cycle.
The Federal Reserve's upcoming FOMC meeting on June 14-15 holds significant implications for markets and the economy, with bond investors anticipating a pause in the June meeting but foreseeing potential rate hikes resuming as early as July. This has led to a cautious repricing of U.S. Treasury yields, with the iShares 1-3 Year Treasury Bond ETF (NYSE:SHY) falling 1.2% in the past month. The ETF's performance is directly impacted by the Fed's interest rate decisions, and the current uncertainty surrounding the future of the rate hiking cycle is likely to continue exerting downward pressure on SHY in the short term.
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