SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

The US Federal Reserve hiked its fed funds policy range by 75bp to 1.5-1.75% with Chairman Jerome Powell indicating that another hike of 50-75bp is likely in July. The rate hike magnitude was the biggest increase in any meeting since 1994. Powell added, “Clearly, today’s 75 basis-point increase is an unusually large one and I do not expect moves of this size to be common”, citing inflation expectations alongside the record jump in May’s CPI to 8.6%. Prior to the data release, expectations were for a 50bp hike with only a 3% probability for a 75bp hike. However, once the CPI print showed an unexpected rise, market participants started pricing in a  75bp hike with a probability of over 90% as per CME data. The table below helps compare the June and May statements by the FOMC.

fomc Jun 2022
The latest dot plots from the Fed can be seen in the chart below where approximately another 175bp of hikes are expected in the remainder of 2022.

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