The Federal Reserve continues to act aggressively on interest rates, pushing the US dollar to historically high levels against several Fitch20 currencies. Given that other central banks are also tightening in response to rising inflation, government bond yields are rising to levels not seen in years, as highlighted in the latest Fitch Ratings’ ‘20/20 Vision’ chart pack.
 
Many Fitch20 currencies including the euro, the Japanese yen, the British pound, the Australian dollar, the Canadian dollar, the Chinese yuan and many other emerging market currencies have lost ground against the US dollar. The latest Fed move saw the central bank raise its upper limit target rate by 75bp in September to 3.25%, the highest level in almost 15 years.
 
Given rising annual inflation rates elsewhere, central banks in the eurozone, the UK, Switzerland, Australia, Canada, India, Indonesia, Mexico, Poland and South Africa have also raised interest rates decisively. Underlying factors driving inflation continue to linger and CPI annual inflation rates remain elevated and well above central banks’ targets.

Global financing conditions have tightened even further and government 10-year bond yields increased significantly in many major economies including the US, Germany, France, Italy, Spain, Switzerland, Australia, Korea and Indonesia. The UK has seen particularly rapid increase in 10-year gilt yields in recent months.
 
Fitch’s bi-monthly ‘20/20 Vision’ chart pack covers the 20 major economies (the Fitch20) that are the focus of Fitch’s Economics team’s global macro analysis and plots five years of high-frequency economic data for 20 variables, with consistent coverage across each country. 

Notes for Editors: Fitch's Economics team, led by Chief Economist Brian Coulton, analyses global macroeconomic trends and their impact on credit markets around the world. The team publishes global macroeconomic research, forecasts and commentary focusing on 20 major advanced and emerging economies.