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Even 2023 may be too early for the Federal Reserve to begin raising interest rates, according to noted bond bull Steven Major.
“I'll believe it when I see it,” said Major, the HSBC Holdings Plc global head of fixed income research, in a Bloomberg TV interview. “It's unlikely the Fed is going to hike any time soon. In fact I would even argue that 2023 is too soon.”
Major's views come as market watchers continue to wrestle with the Fed's intentions after a disappointing August U.S. jobs report which may have delayed plans for a move to first scale back asset purchases at its upcoming September meeting. Money-market traders are currently pricing for the Fed to begin to increase rates in the final quarter of 2022.
Major also maintained his longstanding bullish expectations for bonds, targeting a 10-year Treasury yield closer to 1% by the end of this year, from 1.33% Thursday in Asia.
“I don't fully understand why consensus forecasts are anywhere near 2%” with the Fed needing to make a very rapid, and also unlikely, hawkish tilt for that to happen, he said.
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