Fed's Waller says safety premium for Treasuries is gone, pushing neutral rate higher
Federal Reserve Governor Waller signaled support for holding interest rates steady at the upcoming meeting, cooling speculation about an immediate rate increase. Following his remarks, Treasury yields retreated and stock markets rallied, including back-to-back gains for the S&P 500. Waller also noted progress on inflation while making a plea to give disinflation a chance. However, comments regarding the disappearance of the Treasury safety premium and a higher neutral rate added complexity to the longer-term monetary outlook as officials awaited fresh inflation data.
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- ✓ Federal Reserve Governor Waller signaled support for holding interest rates steady and noted progress on inflation.
- ✓ Treasury yields fell and stock prices rallied, with the S&P 500 posting back-to-back gains following the dovish Fed comments.
- ✓ Waller stated that the safety premium for Treasuries is gone, pushing the neutral rate higher.
What changed
Federal Reserve Governor Waller cooled rate hike expectations and noted progress on inflation, prompting a rally in stocks and bonds.
Live updates
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Fed's Waller Signals Support for Steady Rates
Federal Reserve Governor Waller signaled support for holding interest rates steady at the upcoming meeting, cooling speculation about an immediate rate increase. Following his remarks, Treasury yields retreated and stock markets rallied, including back-to-back gains for the S&P 500. Waller also noted progress on inflation while making a plea to give disinflation a chance. However, comments regarding the disappearance of the Treasury safety premium and a higher neutral rate added complexity to the longer-term monetary outlook as officials awaited fresh inflation data.
Why it matters
Market participants closely monitor Federal Reserve signals for direction on monetary policy and interest rate trajectories. Waller's comments successfully cooled hype surrounding a potential rate hike later this month, directly impacting bond and equity valuations. Analysts continue to weigh incoming economic data against shifting central bank commentary.
What is confirmed
- Federal Reserve Governor Waller signaled support for holding interest rates steady and noted progress on inflation.
- Treasury yields fell and stock prices rallied, with the S&P 500 posting back-to-back gains following the dovish Fed comments.
- Waller stated that the safety premium for Treasuries is gone, pushing the neutral rate higher.
Still unconfirmed
- Some observers viewed Waller's commentary as muddying the exact outlook on a possible rate hike later this month.
What to watch next
- Upcoming inflation data releases
- Federal Reserve policy decisions at the upcoming meeting
confidence 100%Sources used for this update (11)
- economictimes.indiatimes.com — GDP Growth
- Reuters — Fed's Waller channels his inner John Lennon with a plea to 'give disinflation a chance'
- Bloomberg.com — Treasuries Rise After Fed’s Waller Notes Progress on Inflation
- The New York Times — Rate Rise in Play as Fed Officials Await Inflation Data
- WSJ — Stocks, Bonds Rally After Dovish Fed Comments
- PBS — Fed governor Waller muddies outlook on possible rate hike later this month
- Reuters — COMMENTARY: Trading Day: Waller cools Fed hike hoopla
- CNBC — S&P 500 posts back-to-back gains as Treasury yields retreat
- WSJ — Stocks Rally After Fed Official’s Comments on Holding Rates Steady
- Yahoo Finance — Fed's Waller says safety premium for Treasuries is gone, pushing neutral rate higher
- cnbc.com — Treasury yields fall after Fed's Waller signals support for no rate hike
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