Fed minutes: rising stock market offsets rising rates
The minutes of the March meeting released today by the Federal Reserve cited a moderate easing of U.S. financial conditions since the January FOMC meeting, with rising stock markets offsetting higher interest rates. Nominal Treasury yields rose between the two meetings. In the case of short-term bonds, most of the increase was attributed to an increase in inflation compensation, and there are signs that inflation is falling a bit more slowly than the market had expected in recent months. In contrast, longer-term Treasury yields rose mainly because of higher real interest rates, reflecting solid job market data and stronger-than-expected data on economic activity.
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