Economics
Traders Looking to Get Ahead of Fed Again Now Foresee Rate Cuts
- Traders correctly anticipated the Fed’s hawkish 2022 pivot
- Now investors see Fed ending tightening as economy weakens
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Signs of a rapidly deteriorating US economic outlook have spurred bond traders to pencil in a complete policy turnaround by the Federal Reserve in the coming year, with interest-rate cuts in the middle of 2023.
Fed Chair Jerome Powell -- who is widely expected to keep lifting the central bank’s benchmark rate for some time to come -- has pledged he and his colleagues will be “nimble” in setting policy as they assess incoming data. But they would need to be remarkably nimble to keep up with markets.