Bonds
Bond Traders Quickly Come Around to Fed’s View on Peak for Rates
- Fed-dated swaps reflect 5.12% benchmark rate around midyear
- SOFR options activity surges as traders pare bets on rate cuts
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In just two days, the bond market has gone from doubting the Federal Reserve to falling perfectly in line with the US central bank’s projection for a peak in interest rates north of 5% later this year.
The peak level priced into the US swaps curve for the Fed’s benchmark rate around midyear is now 5.12%, up from 4.91% as of Thursday’s close. That matches the median view of Fed officials from December, when they last published projections.