Tariff Turmoil Helps Rates Traders Wrest Narrative Back From Fed
- Futures show bets on 2019 rate cuts are regaining momentum
- Market’s doubts grow that tame inflation is ‘transitory’
Pedestrians pass in front of the Nasdaq MarketSite in the Times Square neighborhood of New York.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
If the Federal Reserve’s optimistic take on inflation had traders second-guessing their bets on an interest-rate cut this year, they’re taking matters back into their own hands now.
Those wagers have gained traction with the escalation in trade tension between the world’s two largest economies. The latest U.S. tariff increase, and promised retaliation from China, are setbacks to the case for higher Treasury yields, and tame inflation data Friday didn’t help. Rather than gamble on a swift resolution to the standoff, investors are more likely to seize on any signs of spillover -- in economic data or markets -- to drive yields lower.