Ye Xie

Japanese government bonds offer investors one of the best opportunities in global fixed income despite being viewed as high risk, according to an Azimut Group fund manager.

On the eve of the Federal Reserve’s policy decision, bond traders are on edge. While most expect policymakers to leave interest rates unchanged, prominent voices across Wall Street are putting their weight behind a hike in just the second meeting run by new Chairman Kevin Warsh.

(Bloomberg) -- On the eve of the Federal Reserve's policy decision, bond traders are on edge.

On the eve of the Federal Reserve 's policy decision, bond traders are on edge. While most expect policymakers to leave interest rates unchanged, prominent

It's indicative of a new regime at the Fed, with Warsh looking to diverge from his predecessors by no longer signaling interest-rate decisions to markets well in advance. A hike would establish Warsh's inflation-fighting credibility, leading some, like Citadel Securities and PGIM, to assign a higher chance of an increase this week. For traders, it means greater angst, illustrated by the record demand seen this week to hedge against a surprise rate hike.

The message from the bond market was clear: For all of Federal Reserve Chairman Kevin Warsh’s tough talk about taming inflation, he’s in no rush to use the power of the central bank to do it.

Bond rout sends warning to Warsh that tough talk is not enough He's in no rush to use the power of the central bank to do it.

Bond investors including Brandywine Global Investment Management and Wellington Management say the risk of a deeper Treasury rout is rising as Federal Reserve Chairman Kevin Warsh keeps investors in the dark about how officials will respond to the evolving economy.

Bond investors including Brandywine Global Investment Management and Wellington Management say the risk of a deeper Treasury rout is rising as

In the note, Shah said relying on markets to tighten financial conditions risks creating a negative feedback loop. Higher long-term borrowing costs encourage the Fed to wait longer before raising rates, which in turn would likely prompt investors to demand even larger inflation and term premiums, pushing yields higher still.