DANIEL FUSS: The Fed will 'drag their feet absolutely as long as possible'

Daniel Fuss of Loomis Sayles doesn't think the Federal Reserve will raise rates this year.

The market sees a high chance that the Fed will hike for the first time in seven years before 2015 runs out.

And last Friday, Fed chair Janet Yellen said that a rate hike would be "appropriate at some point this year."

According to Bloomberg's Kevin Buckland and Hiroko Komiya, Fuss says the Fed will "drag their feet absolutely as long as possible."

Here's Bloomberg on Fuss' thinking:

"Higher U.S. borrowing costs would encourage capital to flow into the dollar and out of emerging markets that sorely need those funds, said Fuss, one of the Boston-based managers of the $23.7 billion Loomis Sayles Bond Fund. As a result, he predicts the Fed will put off tightening policy until early next year, even in the face of a strengthening economy."

And so, while the Fed's dual mandate is for maximum employment and price stability, Fuss sees the Fed having something of a third, international mission, which could pressure their plans to tighten US monetary policy.

Fuss forecasts that the the ten-year yield will end 2015 at 2.3%, although it could climb as high as 2.6%.

Yields have wobbled so far this year, reaching a year-to-date high of about 2.3% earlier this month.

Head over to Bloomberg for the full story »