Federal Reserve officials thought they were probably done raising interest rates when they decided last month to hold rates steady, but minutes of the meeting didn’t show a meaningful debate about when to start lowering rates.

While nearly all officials anticipated policy rates would be lowered this year, they kept the prospect of higher rates on the table at their Dec. 12-13 meeting, according to minutes released Wednesday.

“It was possible that the economy could evolve in a manner that would make further increases in the target rate appropriate,” the minutes said. “Several also observed that circumstances might warrant keeping the target range at its current value for longer than they currently anticipated.” (WSJ - Continue Reading) 

Bond traders who just days ago were piling into wagers for more than six interest-rate cuts from the Federal Reserve this year already appear to be having second thoughts.

JPMorgan’s latest Treasury client survey showed the biggest net drop in long positions since May 2020, according to a report covering the week through Jan. 2. It includes Tuesday’s price action, which saw Treasury 10-year yields end the day higher by over 5 basis points amid doubts that central bankers would give up their fight against inflation so quickly.

The shift in positioning was driven by both a reduction in longs and new short bets. Last week saw 10-year yields drop as low as 3.78%. They’ve since surged, breaching 4% in Wednesday’s US session before a flood of dip buyers helped bonds pare losses. (BBG - Continue Reading) 

Wall Street sees another challenging year for energy stocks as analysts expect abundant oil supplies will keep heightened geopolitical tensions from spurring a significant rally in crude prices.

It’s a gloomy outlook for investors in energy, which was the second-worst performer of the 11 sectors in the S&P 500 Index in 2023. Now analysts anticipate that the industry’s fourth quarter earnings growth, broadly speaking, will be the weakest of the group, Bloomberg Intelligence data show.

On Wednesday, Mizuho Securities downgraded eight oil and gas producers and slashed price targets on a raft of others, a sign that Wall Street is unlikely to be swayed by bursts of strength in energy shares and oil prices. Both surged Wednesday amid tensions in the Mideast and a production halt in Libya. (BBG - Continue Reading)