Bond Traders Ponder Next Inversion as Fed Dots Take Center Stage
- Rate hike seen as lock, so projected 2019 path may sway market
- Latest forecasts could deepen yield-curve inversion: BMO
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Bond traders are all but certain the Federal Reserve will tighten policy this week. The suspense centers on officials’ latest forecasts for interest rates and the economy, which have implications for one of the biggest debates in the Treasury market.
The updated projections come as investors are losing confidence that the Fed will keep hiking amid tame inflation and doubts about global growth. Strategists say a key focus is the Fed’s outlook for 2019, which could dictate whether the inversion seen in some parts of the yield curve becomes more pervasive. The spread between 2- and 10-year yields is already close to going negative for the first time since 2007.