Economics
Investors Are Starting to Price in Rate Cuts in 2020
- Treasuries surge, led by long-end, as stock markets tumble
- Yield curve from 2 to 10 years sinks below 10 basis points
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Treasuries surged as plunging stocks sparked a bout of risk aversion and traders started betting that the Federal Reserve will cut interest rates as soon as 2020.
Traders have been slashing the expected pace of rate hikes since the central bank’s top brass flagged global headwinds to growth and opened the door to a change in the policy path. That move picked up Tuesday. The swaps market has moved up the timing for when it sees the hiking cycle peaking, toward the end of 2019 or early 2020, a period when the Fed’s own projections indicate tightening will still be under way.