Today, Fed raised Federal Fund Rate by 0.25%

Short Comment

As the market expected, Fed raised their rate once more.

With this, their message get consensus back to rises four times, not three in this year.

While long-term market didn't show strong reaction to the rise, short-term market reacted strongly to this with about 29bp up in US T-Note 2y.

This made 2s10s become lower than 0.40.

And about this, my perspective doesn't change at all.

Whether Fed raise their rate four or three

- Weak US FI markets, strengthening Yield flattening and hard environment for commercial banks -

The weakness in US FI market is inevitable.

Even if the market could enter into temporal bullish market once or twice along with some events, movements of Federal Fund Rate and demand to capital from US government couldn't be ignored.

But I don't think that US T-Note 10y would surpass 3.3 in this year.

It's because there are still enough demands to safe assets which have long-maturities, like it was in 2004-2008.

My target for 2s10s in this year is below 30bp, and this mean pace of rise of 2y yield will be much faster than that of 10y.

And let see about the other markets, they are already preparing to rises of the rate.

EUR, JPY and Gold which are supposed to be weak about rise of the rate, aren't that weak in this time.

EUR was raised, and decreases of JPY and Gold were very limited.

But, I think that EUR and JPY couldn't enter into bullish stage in near future like I did before.