Bond yields fall, stocks rally as Fed's Waller comments curb rate hike bets
Stock markets rallied and bond yields fell following comments from Fed Governor Christopher Waller suggesting a patient approach to interest rate hikes. The market reaction reflects shifting expectations for U.S. monetary policy.
Why it matters
Interest rate decisions significantly impact global financial markets, borrowing costs, and economic growth trajectories.
By Caroline Valetkevitch and Amanda Cooper
NEW YORK/LONDON, Sept 3 (Reuters) - Stock markets rallied while bond yields fell on Thursday as comments from Federal Reserve Governor Christopher Waller signaled a willingness to remain patient on raising interest rates.
The Japanese yen jumped by 2% against the U.S. dollar as traders ramped up bets on a Bank of Japan interest rate hike.
Waller, in remarks for a Reuters NEXT Newsmaker event, said that, if upcoming data confirmed inflation pressures were cooling off, he was inclined to argue in favor of keeping interest rates steady at the U.S. central bank's next policy meeting.
Expectations for a rate increase at the Fed's mid-September meeting came down after the comments, with the market now pricing in a roughly 50% chance for a hike, versus about 63% in the prior session, according to CME FedWatch.
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