Traders' Rate-Cut Bets Shift Goalposts for Fed Playing Catchup
- Officials see 2020 hike as the next move; market expects a cut
- Treasury yields still have room to fall, PGIM’s Tipp says
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Bond traders have a decent record when it comes to nailing the Federal Reserve’s path relative to official guidance. So while Chairman Jerome Powell says the policy rate is “in a good place,” history suggests his next move could align with what futures are showing -- a rate cut.
Money-market traders have proven skeptical in recent years -- and much of the time rightly so -- about just how much the central bank might be able to push rates back up toward more historically normal levels. Officials on Wednesday scaled back from two to zero the number of rate increases they foresee in 2019.