Markets Play Game of Chicken With Central Banks on Pivot Bets
- Market pricing has shifted rapidly to price in rate cuts
- Easier financial conditions make central banks’ jobs harder
This article is for subscribers only.
Bullish markets are increasingly pricing in a second-half reversal of the global monetary tightening wave, making it tougher for central bankers to vanquish inflation once and for all.
This year’s rally in bonds as traders bet on rapid policy pivots sent the average two-year yield down 30 basis points across the Group of 7 major developed economies, the steepest five-week plunge since early 2012.