(MENAFN- Gulf Times) The Federal Reserve will delay raising US interest rates until next year, a Morgan Stanley index shows.
Greece's struggle to stay in the euro currency union along with plunging prices for Chinese stocks and commodities globally are all threatening to slow global economic growth.
The International Monetary Fund on Tuesday reiterated its view that the Fed should wait until the first half of 2016 to act. The mix is driving a rally in Treasuries.
The US central bank won't increase borrowing costs until the first quarter of 2016, according to the Morgan Stanley index, which is based on an analysis of futures trading.
As recently as last month, the gauge projected a shift by year-end. The Fed was scheduled to issue the minutes of its June 16-17 meeting at 2pm on Wednesday in Washington. "Greece has been a headache," said Park Sungjin, head of investment management in Seoul at Meritz Securities Co, which has $7bn in assets. "The timing of the Fed rate increase will be postponed. The situation helps the Treasury market."
The benchmark 10-year US yield fell seven basis points, or 0.07 percentage point, to 2.19% as of 10:49am London time, according to Bloomberg Bond Trader data. The 2.125% note due in May 2025 rose 5/8, or $6.25 per $1,000 face amount, to 99 14/32.
US government debt returned 0.6% in July through on Tuesday, after tumbling almost 2% during the previous three months, based on the Bloomberg US Treasury Bond Index.
European leaders set a Sunday deadline for Greece to accept a rescue, saying otherwise they'll take the unprecedented step of propelling the country out of the euro.
The Shanghai Composite Index plunged as much as 8.2% yesterday on concern government measures to stabilize equities are failing to stem a three-week rout. The gauge has tumbled about 30% since its June peak.
The Bloomberg Commodity Index touched the lowest level since March on Tuesday.
Mirae Asset Global Investments Co isn't ready to rule out the Fed acting in 2015.
The US economy is strong enough to justify an increase as soon as September's meeting, said Will Tseng, a portfolio manager for the company in Taipei.
"The US fundamentals are still healthy enough for the Fed to tighten policy," he said. Mirae has $70bn under management.
Policy makers have kept their benchmark, the target for overnight loans between banks, in a range of zero to 0.25%, since December 2008. The way things are going, the rate may be staying lower for longer than anyone anticipated.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.