MORNING BID-Keep the FAIT

By Reuters3 days ago

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A look at the day ahead from Sujata Rao

The messages from the Fed's minutes could not be clearer. First, despite the blowout March payrolls report, labour markets are nowhere near its threshold for reining in easy monetary policy. And the Fed aims to let inflation average 2% for some time before contemplating any tightening.

In short: FAIT or flexible average inflation targeting.

The message seems to have sunk in - 10-year Treasury yields are some 10 basis points off recent highs, a spike in short-dated yields has abated and some of the most aggressive pricing of Fed rate hikes has been scaled back.

Markets will await Fed Chair Jay Powell's appearance at the IMF spring meetings but the minutes have lifted U.S. equity futures half a percent, following Wednesday's records on Wall Street. European stocks are opening higher too, with the UK's FTSE looking to extend its Wednesday run to record highs.

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