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Bond Traders Are Trapped Between Recession and Inflation Fears

  • ‘It’s a tough time to be a high-conviction manager’: McIntyre
  • Yields have dropped amid growing concern about economic growth

Bond investors are torn about whether the recent pullback in yields -- fueled by increasing fear of recession -- marks an end to the worst Treasury bear market of the modern era, or just a pause.

Treasuries rallied sharply in the past week as Federal Reserve Chair Jerome Powell told US lawmakers that it will be “very challenging” for the bank keep the economy growing as officials raise interest rates aggressively to rein in the steepest inflation in four decades. Yet how soon such a contraction could come -- and how painful it would need to be to alter the Fed’s path and cap on Treasury yields -- is far from certain. And that’s proving vexing for investors trying to time the bond-market’s bottom.