Economics
Bond Traders Move Closer to Fed, Ramping Up 2019 Rate Hike Bets
- Two-year yields surge to decade highs as 2 hikes priced in
- But divide remains for peak rate: Fed sees 3.4%, market 2.8%
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For the world’s biggest bond market, 2019 is turning into a battleground for bets on the path of U.S. monetary policy. Treasury yields are rising across the curve, even as skepticism lingers about whether the Federal Reserve will hike as aggressively as policy makers anticipate.
Two-year U.S. rates on Wednesday climbed to levels unseen in more than a decade, while a selloff in the past two days is driving the benchmark 10-year yield above 3 percent and near its highs for the year. Investors in recent weeks have moved closer to the Federal Reserve’s projected path of three rate hikes next year and are now pricing in two, following expected increases next week and in December.