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Rates Markets Losing Faith in Fed’s Soft-Landing Scenario

  • Eurodollars pricing in interest-rate cuts after June 2023
  • Yield curve crushed following Powell’s talk of inflation risks

Hopes for a soft landing for the U.S. economy are fading in the bond market.

The Treasury yield curve is hurtling toward an inversion and traders have added to bets on interest rate cuts as soon as next year. They’re growing more concerned that a rapid-fire series of hikes from the Federal Reserve could cause a recession, following Chair Jerome Powell’s willingness to act more aggressively to get ahead of resurgent inflation.