Macro Quick Hit: Putting The Widening in Funding Spreads Into Context
Much has been written in recent weeks about the widening in funding spreads with some commentators suggesting it reflects increased stress in markets and credit concerns. Others have said that spread widening represents additional tightening over and above the Fed’s rate hikes and balance sheet rundown. With this Macro Quick Hit we will attempt to address two questions: First, are funding market spreads indicating heightened concerns about credit risk? Second, is the widening in spreads resulting in a tightening of financial conditions by more than the Fed intends (and thus might it slow the pace of rate hikes)?
RDQ Economics provides global macroeconomic consulting services with an emphasis on U.S. economic fundamentals and monetary policy.
Our views are driven by consistent application of classical economic and monetary principles and has generated superior anticipation of changes in the stance of monetary policy and of movements in economic growth and inflation.
The founders of RDQ Economics, John Ryding and Conrad DeQuadros, have a combined experience of 26 years on Wall Street, 12 years of experience in central banking at the Federal Reserve and the Bank of England and nine years in the independent research space. John and Conrad have worked closely with fixed income, foreign exchange, and equity traders and portfolio managers, which has enabled their analysis and advice to be tailored to a clientele that is focused on trading and investment decisions.
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