US House of Representatives ousted Kevin McCarthy as speaker, a first in U.S. history. This is likely to add to bond and equity markets volatility.

The FOMC kept rates unchanged as expected but made clear that higher rates are the new normal. US 2-year yields hit the highest level since 2006, after what can be described, as a still somewhat hawkish Fed.

The ECB just raised its key rates again today, by 25bp (main Refi rate at 4.50%, deposit rate at 4.00%).

Fitch Ratings downgrades the U.S. from AAA to AA+ due to debt ceiling standoffs and fiscal concerns. Disagreements arise, but the downgrade reflects rising debt and governance issues. Markets react with higher bond yields, prompting a closer look at potential implications for investors.

The possibility of a “technical default” by the US has been raised as the current debt limit for the US government, set by law, is expected to be hit sometime during the summer.

Jerome Powell spoke yesterday in the US Senate to present the Fed’s semi-annual monetary policy report. The Fed’s Chair took this opportunity to reiterate the commitment of the Fed in bringing inflation lower.

Interest rate volatility rebounded sharply last week, while U.S. Treasuries had their worst week in 2023.

All major central banks raised interest rates again, but with different magnitudes and language.

In a surprise move, the Bank of Canada (BoC), after raising its policy rate by 25 bps, announced a pause at its current level (4.5%) unless economic data surprises on the upside.

After today’s hike, The Fed Funds rate will have increased by the most amount since the six months ending March 1981.