Further softening of Fed tightening expectations - BBH

Analysts at Brown Brothers Harriman explained that soft US data and delays to fiscal stimulus plans from the Trump administration has led to further softening of Fed tightening expectations.  

Key Quotes:

"Markets no longer view another hike in 2017 as likely. Indeed, less than one hike is currently priced in for 2018 followed by less than one in 2019. Some investors believe the Fed is done tightening.  

The US 10-year yield has fallen to 2.06% to the lowest since November 2016. Fundamental and technical developments suggest it could fall further. The benign global liquidity backdrop helped propel most risk assets higher, not just EM. These include global equity markets as well as spread products.

As the global backdrop hopefully clears up in the coming months, we still believe it is very important for investors to continue focusing on country fundamentals and on hedging out currency risk whenever feasible."