February 28, 2024
United States:
The Big Bond Steepener Is Flopping as the Fed Delays Rate Cuts
What was supposed to be the darling trade of 2024 has unraveled, thanks to the Federal Reserve upending predictions over how fast it would lower interest rates.
The market entered January aggressively betting on sharp rate cuts. By doing so, traders looked to profit from the US Treasury yield curve returning to a traditional upward slope, a transition known as a steepener. That would put longer-dated yields back above their short-term equivalents, reflecting the usual need to be compensated for risk over time.
Europe:
Euro-Area Economic Confidence Unexpectedly Weakens on Services
Euro-area economic confidence unexpectedly deteriorated in February, a setback to the region’s recovery hopes.
A sentiment indicator published on Wednesday by the European Commission fell to 95.4, the weakest in three months and lower than predicted by any economist in a Bloomberg survey.
Asia:
HK Raises Tax for High Earners, First Hike in Two Decades
Hong Kong will raise the tax on high earners — the first increase in two decades — in a surprise move designed to lower the city’s fiscal deficit.
A two-tier tax system will be introduced from April, with income of up to HK$5 million ($640,000) taxed at a maximum of 15%, and anything higher than that being taxed at 16%. Currently the rate for all individuals is capped at 15%.
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